Seatrium commits support for subsidiary’s bond payment obligations

The interest rate margin has lowered since 18 August.

Seatrium announced that it signed a deed of guarantee last friday with its recently acquired Seatrium Offshore & Marine or SOM (formerly Keppel Offshore & Marine) for the latter’s bonds payment obligations.

To recall, on 27 February, SOM issued $500m floating rate bonds due in 2026, with DBS Bank acting as the lead manager for the issuance.

In favour of the bonds' holders, the move solidifies Seatrium’s commitment to ensuring SOM's payment obligations under the bonds, it stated in a bourse filing. 

As a result of this parent guarantee, the interest rate margin – a determining factor in the bonds' interest rate calculation – has been lowered from 18 August. 

This decision will effectively reduce the interest expenses linked to the bonds, positively impacting SOM's financial obligations.

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As outlined in the circular issued on 31 January, prior to the acquisition finalisation, SOM had settled outstanding interest and partially redeemed perpetual securities previously issued to Keppel Corporation Limited (KCL), making a payment of $500m in cash. 

To facilitate this payment, SOM secured a $500m commitment letter with DBS Bank. This financing endeavour necessitated security arrangements, potentially involving a parent guarantee.

Seatrium Limited (formerly Sembcorp Marine Ltd), in reference to its recent acquisition of Seatrium Offshore & Marine or SOM ( and formerly Keppel Offshore & Marine), has taken a significant step to assure financial stability. 

Following the completion of the acquisition on 28 February, SOM became a wholly-owned subsidiary of Seatrium Limited.

It's important to note that none of the Company's directors possess any direct or indirect interest in the Deed of Guarantee, apart from potential shareholdings in the Company.

This guarantee is not expected to significantly affect the consolidated earnings or net tangible assets per share of the Company and its subsidiaries for the ongoing fiscal year ending on 31 December 2023.