SINGAPORE, Nov 3 (Reuters) – Rig builder Keppel Corp said on Thursday it would subscribe to a bond offer by KrisEnergy Ltd, potentially increasing its majority holding and throwing a lifeline to the debt-laden oil and gas explorer.
Keppel said it would subscribe to an up to S$140 million ($101 million) preferential offering of zero-coupon secured notes, which are coupled with warrants, that KrisEnergy announced earlier on Thursday.
Keppel would back the offering by taking up its allotted portion and the amount not taken up by other shareholders.
Its shareholding in KrisEnergy could rise to 67.33 percent from the current 40 percent if no other shareholder takes up the preferential offering and Keppel chooses to exercise all the warrants.
Subscribing to the offer will help Keppel preserve its investment as well as benefit from any potential recovery in the market, said Yeak Chee Keong, an analyst at brokerage Maybank Kim Eng.
Shares of KrisEnergy closed 1.4 percent higher after rising as much as 12.4 percent. Keppel ended up 0.4 percent, while the benchmark Straits Times Index closed 0.2 percent lower.
KrisEnergy is among a growing list of Singaporean firms struggling to meet debt commitments due to tumbling global oil prices.
On Thursday, it said it would seek to extend the maturities of its S$130 million bond due in 2017 and S$200 million bond due in 2018 by five years. It proposed reducing the bonds’ coupons to 4 percent, from 6.25 percent and 5.75 percent, respectively.
KrisEnergy also said it had agreed with DBS Bank Ltd to amend terms and covenants of its revolving credit facility, including extending the maturity to June 2018.
The proposed restructuring, if successful, would yield “a stable and sustainable capital structure, reduced short-term cash debt service obligations and greater liquidity,” KrisEnergy said.
The firm reported a net loss for the third quarter, compared with a profit a year earlier.
($1 = 1.3833 Singapore dollars) (Reporting by Aradhana Aravindan; Editing by Christopher Cushing and Biju Dwarakanath)
(c) Copyright Thomson Reuters 2016.