SINGAPORE (June 1): Keppel Corporation has requested Floatel International, an associated company of Keppel Offshore & Marine (Keppel O&M) to perform an independent review of its business plan, which would require a review and update of the assumptions in assessing the valuation-in-use (VIU) of their assets.
This comes as Keppel Corp realised that Prosafe, a leading owner and operator of semi-submersible accommodation vessels (flotels), had made an impairment of US$810.5 million (S$1.14 billion) to the book value of its vessels following a re-assessment of the market outlook and its assumptions used in the calculation of the VIU of its vessels.
Prosafe has adopted different assumptions from that disclosed in its April 20 annual report for the financial year ended Dec 31, 2019. The assumptions were also significantly different from Floatel’s assumptions used in the calculation of the VIU of its vessels.
Floatel’s 4Q results ended Dec 31, 2019, stated that Floatel had performed an impairment assessment of its vessels and recognised an impairment of US$30.3 million to the book value of its vessels.
In making this impairment, Floatel had in the calculation of the VIU of Floatel’s vessels, made certain assumptions in respect of the charter rates, utilisation, operating expenses, capital expenditures and discount rate of its vessels.
On Feb 23, Keppel Corp determined that no further impairment was required on the carrying value of the its investments in Floatel of approximately $477 million as at Dec 31, 2019, which had already taken into account, among others, its $51 million loss in Floatel.
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As at 9.55am, Keppel Corporation shares were changing hands 1.7% higher, at $6.01.
