Shareholders have overwhelmingly backed Sembcorp Marine’s plan for a SGD 2.1bn ($1.5bn) recapitalisation and demerger from parent company Sembcorp Industries.

Some 98.76% of the vote share was in favour of a rights issue to recapitalise the company, while 87.7% voted in favour of a whitewash resolution that waives the need for Temasek Holdings to make a general offer for the company after it becomes the majority shareholder.

The timeline of the 5-for-1 rights issue and the demerger will be released in the offer documents due to be published over the next few weeks.

Last week Sembcorp Marine told investors that its recapitalisation plans were “vital” for the company and in the “best interests” of shareholders.

The rights issue will see Sembcorp Marine raise SGD 600m in cash with the remaining SGD 1.5bn being a debt-to-equity swap for Sembcorp Industries.

“The significant deleveraging from this rights issue is positive in our view as net gearing will decline from the current 1.35x to 0.45x after the rights issue,” said UOB Kay Han offshore analyst Adrian Loh.

“On our estimates, the lifeline of SGD 600m will be able to last Sembcorp Marine for at least two years based on our forecast operating expenses and maintenance capex.”

Despite this, Loh has downgraded Sembcorp Marine’s shares to a ‘sell’ with a lower target price of S$0.29 per share, which equates to its theoretical ex-rights price.

“In the near term, the stock will likely face selling pressure from Sembcorp Industries shareholders that may not want exposure to the offshore and marine sector,” said Loh.

“Industry headwinds persist as day rates and utilisation rates for rigs have deteriorated further since our last update, thus chances of a recovery in the near to medium term remain low.”

The successful outcome for Sembcorp Marine comes just days after Temasek Holdings withdrew its partial offering for larger rival Keppel Corp.

However, KGI Securities analyst Joel Ng said that the withdrawal meant that Temasek now “has a war chest of SGD 4bn” and could redeploy the capital in Sembcorp companies.