Keppel Corporation Limited referred to its announcement July 9, 2012 relating to the acquisition by its wholly-owned subsidiary, Devan International Limited (Devan), of a 20 percent shareholding interest in the enlarged share capital of KrisEnergy Ltd (KrisEnergy). KrisEnergy is currently an associated company of KCL.
Call Option Agreement
As disclosed in the Announcement, in connection with the Acquisition, Devan was granted a call option to acquire additional ordinary shares in KrisEnergy representing approximately 16 percent shareholding interest in the capital of KrisEnergy from KrisEnergy Holdings Limited, an existing shareholder of KrisEnergy.
In view of a potential initial public offering of KrisEnergy (IPO), Devan and the Seller have on June 28, 2013 agreed to amend certain terms of the Call Option, principally, the exercise price of the Call Option and following such amendment, Devan has exercised the Call Option at the IPO Exercise Price, subject to the IPO occurring by August 15, 2013 and an earn-out mechanism in which Devan agrees to pay to the Seller the difference between original exercise price and the IPO Exercise Price, subject to certain conditions being met post-listing. If the earn-out mechanism is triggered, the maximum consideration for the exercise of the Call Option would be approximately $122,667,200.
For the purpose of the foregoing, the IPO Exercise Price means the offering price for the IPO, converted from Singapore Dollars to U.S. Dollars in accordance with the terms of the Call Option Agreement.
The number and/or original exercise price of the Call Options Shares are subject to adjustment in the event of, inter alia, a sub-division of the Shares.
Cornerstone Subscription Agreement
In connection with the potential IPO of KrisEnergy, Devan has on June 28, 2013 entered into a cornerstone subscription agreement with KrisEnergy, pursuant to which it has agreed to subscribe for new Shares in the capital of KrisEnergy at the offering price for an aggregate subscription price of $35,000,000 (Cornerstone Subscription).
The obligation to subscribe for new Shares is conditional upon, inter alia, the Shares in the capital of KrisEnergy being listed on the Singapore Exchange Securities Trading Limited by August 15, 2013 or such other date as the parties shall mutually agree.
The consideration for the above transactions was arrived at on a willing buyer willing seller basis, taking into account the potential IPO of KrisEnergy, KrisEnergy’s portfolio of oil and gas assets in Southeast Asia, production estimates and estimated capital expenditure and operating expenses. The cash consideration will be funded through internal working capital.
Following the completion of the Call Option Exercise and the Cornerstone Subscription, the Company’s current 20 percent shareholding in KrisEnergy is expected to increase to marginally above 30 percent. The Company will make an announcement at a later stage of the actual increase in shareholding when this has been determined.
The Company’s chief executive officer and chief financial officer, Choo Chiau Beng and Loh Chin Hua, are directors of KrisEnergy. Tan Ek Kia, an independent director of the Company, is also an independent director of KrisEnergy. Save as aforementioned, none of the directors or controlling shareholders of the Company has an interest, direct or indirect, in the above matter other than through their shareholding interests in the Company.
The aforementioned transactions are not expected to have any material impact on the earnings per share and net tangible assets per share of the Company for the current financial year.
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