The Straits Times / The Business Times News on Cosco

SembMarine buys Temasek's 5% stake in Cosco Corp

SEMBCORP Marine, the world's second largest builder of offshore oil rigs, plans to buy over parent Temasek Holdings' 5 per cent stake in Cosco Corporation (Singapore) for some $120.34 million.

The purchase from Temasek's wholly owned subsidiary, Seletar Investments, will raise SembMarine's holding in the Singapore-listed Chinese shipping company from 70 million shares or 3.17 per cent of Cosco Corp's issued shared capital to 180.4 million shares or 8.17 per cent.

The purchase price of $1.09 a share was at a discount to its closing price of $1.25 yesterday on the Singapore Exchange.

SembMarine said the investment in Cosco Corp was in line with the company's strategy to grow its marine and offshore business in Singapore and China.

Both SembMarine and Cosco Corp have equity interests of 30 per cent and 51 per cent respectively in Cosco group's Cosco Shipyard Group (CSG) which controls a third of China's shiprepair business.

CSG owns five major shipyards in key coastal cities from Dalian in the north to Guangzhou in the south. Cosco Corp also has a direct equity interest of 50 per cent in Cosco Nantong and 39 per cent in Cosco Dalian.

SembMarine's president and chief executive Tan Kwi Kin said: 'Our strategic tie-up with Cosco Corporation and the Cosco Shipyard Group would enable us to enhance and increase our capacity to take on offshore projects. We are leveraging on the facilities and strengths of our partners.'

Temasek, largely through SembCorp Industries, has a deemed interest of 62.09 per cent in SembMarine. As the purchase price represents 11.3 per cent of SembMarine's latest consolidated audited net tangible assets of $1.6 billion, exceeding the 5 per cent threshold, the deal requires shareholder approval which will be sought at an extraordinary general meeting.