Restructuring within SembCorp Group for greater synergy

July 13, 2006

- SembCorp Industries to sell SMOE and Sembawang Bethlehem to SembCorp Marine

SembCorp Industries Ltd (SembCorp) announces that it has today, through its wholly owned subsidiaries, SembCorp Utilities Pte Ltd (SembUtilities) and Sembawang Corporation, entered into conditional Sale & Purchase Agreements for the sale of SMOE Group (SMOE) and Sembawang Bethlehem Pte Ltd (SemBeth) to SembCorp Marine Ltd (SembMarine) and SembMarine’s whollyowned subsidiary, Sembawang Shipyard Pte Ltd (SSPL) respectively, for a total cash consideration of approximately S$66.75 million.

The proposed transactions would lead to greater synergy within the Group by enabling SembUtilities to focus on its core utilities operations, and strengthening SembMarine’s position as a leading global player in the offshore oil and gas sector.

The transactions are subject to the approval of SembMarine’s minority shareholders at an Extraordinary General Meeting to be convened, and consists of the following Sale & Purchase Agreements:

a) A Sale & Purchase Agreement between SembUtilities and SembMarine, for the sale of the entire equity interest in SMOE, for a cash consideration of S$55 million.
SMOE controls three subsidiaries, namely SMOE Indonesia, PT SMOE Indonesia and SCE. Besides the fabrication facilities located at Admiralty Road, leased from SemBeth, SMOE also owns a yard comprising 30 hectares of fabrication facilities and 275 metres waterfront land in Batam, Indonesia. The consideration for SMOE was determined on a willing-buyer-willing-seller basis taking into account, amongst other factors, the estimated Net Tangible Asset (NTA) of SMOE as at July 31, 2006 of S$46 million.

b) A Sale & Purchase Agreement between Sembawang Corporation and SSPL, for the sale of the entire equity interest in SemBeth for a cash consideration of S$11.75 million, based on the estimated NTA of SemBeth as at July 31, 2006.
SemBeth owns the land and buildings located along Admiralty Road East and Admiralty Road West with a total land and sea shore area of 86 hectares (Admiralty Property) at a net book value of S$128.7 million as at July 10, 2006. The Admiralty Property was substantially funded by a S$124 million loan taken by SemBeth from SembCorp Financial Services (SFS), a wholly owned subsidiary of SembCorp. The loan will be repaid by SemBeth to SFS, post completion of the transaction.
Colliers International Consultancy & Valuation (Singapore) had valued the Admiralty Property at S$113.9 million on February 14, 2006.

Commenting on the transactions, Mr Tang Kin Fei, President and CEO of SembCorp, said: “This restructuring is part and parcel of SembCorp’s commitment to deliver and enhance shareholder value on a sustainable basis.

The sale of SMOE and SemBeth to SembCorp Marine and SSPL would enable our Utilities business to focus on growing its integrated utilities and energy business. The transactions would also enable SembCorp Marine to maximise and optimise the use of the land at Admiralty and in Batam, as well as the resources within SMOE. This would enable SembCorp Marine to seize more opportunities in rig building and semi-submersible projects and enhance our global market share in the offshore oil and gas sector.”

The impact arising from the above transactions on SembCorp’s NTA and EPS for the financial year ending 2006 is not expected to be material.

Other than Mr Tang Kin Fei and Mr Goh Geok Ling, who are directors of SembMarine, none of the directors or controlling shareholders of SembCorp has any interest, direct or indirect, in the acquisition, save for the above.