Singapore’s Keppel Corporation is to take a S$318 million (US$240 million) hit in its half-year results related to its exposure to independent upstream company KrisEnergy that has gone to the wall after running out of funds and access to ready finance.
Keppel said it had been supportive of KrisEnergy’s attempt to deliver a successful financial restructuring because this was expected to “preserve and generate” maximum returns from the operator for the company.
The operator had been banking on cash flow from its Apsara oilfield offshore Cambodia, which came on stream late last year, to turn around its fortunes but production was way below the expected rate.
However, KrisEnergy on 4 June threw in the towel and announced it had filed a winding-up petition with the Grand Court of Cayman Islands and now Keppel seems to want to get its hands on KrisEnergy’s E&P assets.
Keppel said that it benefits from a “comprehensive first ranking security package” over these assets in Cambodia, Indonesia, Thailand and Bangladesh.
“In view of KrisEnergy’s filing of a winding-up petition, we are now implementing detailed recovery plans developed in consultation with our financial advisor and legal adviser to preserve KrisEnergy’s assets and to maximise recoveries for us,” said Keppel.
The company has moved to appoint Patrick Bance, Mitchell Mansfield and Kent McParland, each of Borrelli Walsh, as joint and several receivers over the assets of a number of members of the KrisEnergy group including the shares in and assets of KrisEnergy (Asia) Ltd.
“Once appointed, the receivers will pursue all necessary action to maximise recoveries for the benefit of Keppel,” the company said in a statement to the Singapore Stock Exchange.
Keppel’s touted first half 2021 loss is measured by estimating the recoverable amounts of the various assets of KrisEnergy, less its obligations in connection with its revolving credit facility, carrying amounts of investment, contract asset and receivable from KrisEnergy, and other costs to realisation of the assets.