Thursday, June 4, 2009

Daily news - 4 Jun

Keppel customer hit by restructuring snag
Keppel Corporation – SKEIE Drilling and Production (SKDP), a customer of Keppel Corporation, is at risk of filing for bankruptcy if a proposed restructuring falls through. SKDP currently has construction contracts for three N-Class jack-up offshore drilling rigs with Keppel Corp's subsidiary Keppel Fels, valued at about $1.7 billion. On April 17 this year, SKDP announced a re-structuring proposal with shareholders - Keppel (less than 10 per cent), Skeie Technology and Wideluck - to underwrite US$85 million of new equity in a US$85-100 million private equity placement. The proposal has been rejected by a group of bondholders which hold a majority of three secured bond loans issued by SKDP. SKDP has also failed to make milestone payments, such as a US$37 million payment on Rig 1 due on May 31 and it has also said that it is unable to make a US$40 million payment on Rig 3 that is due on June 4. These breaches could result in a breach of bank loan agreements and the bank's US$675 million commitment to finance the rigs would be terminated, SKDP said in a press release on Tuesday. As such, '. . . the SKDP board of directors believe SKDP is insolvent and will soon be illiquid unless the proposed re-structuring is approved,' SKDP said.

Source: Kim Eng

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