Keppel O&M Increases Stake in FELS Setal

Keppel Offshore & Marine Ltd (Keppel O&M), the wholly owned subsidiary of Keppel Corporation Limited, has acquired from the PEM Setal Group 22.75% interest in FELS Setal S.A.

With the acquisition, Keppel O&M's shareholding in FELS Setal increases from 60% to 82.75%.

The cash consideration for the purchase is US$9 million. This was arrived at on a willing buyer and willing seller basis taking into account the net assets of the company and existing contracts.

Mr. Augusto Mendonca, President of PEM Setal said, "We are in the midst of restructuring the PEM Setal Group and we are pleased to have an extremely supportive partner in Keppel O&M.

"We look forward to continue working with Keppel O&M to make FELS Setal even more successful."

Mr. Tong Chong Heong, Managing Director & Chief Operating Officer of Keppel O&M, said, "The growth of FELS Setal is very important to all stakeholders in revitalizing the offshore and marine industry in Brazil and the creation of jobs. Keppel is committed to this."

Keppel O&M is a global leader in offshore rigs and ship conversion and repair as well as a specialized shipbuilder. Its near market, near customer strategy is boosted by its global network of 16 yards in the Asia Pacific, Gulf of Mexico, Brazil, the Caspian Sea, Middle East and the North Sea regions. Integrating the experience and expertise of its yards worldwide, the group aims to be a provider of choice and a partner in solutions for the offshore and marine industry.

FELS Setal, the Brazilian subsidiary of Keppel O&M, is the industry leader in Brazil with the best-equipped offshore yard in South America. The company is currently involved in the construction of the P-51 and P-52 semi-submersible platforms for Petrobras SA, Brazil's national oil company.

The book value and net asset value of the sale shares as at 31 Dec 2003 was US$2.3 million. The transaction is not expected to have any material impact on the earnings per KCL share and net tangible assets per KCL share for the financial year 2005.

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