Keppel Corp has announced that it will recognise an impairment loss of $318 million on its exposure to oil and gas company KrisEnergy, after the latter announced on June 4 that it has submitted a winding-up petition.

See: KrisEnergy submits petition to wind up as it is unable to pay its debts

In a filing to SGX on June 8, Keppel says it benefits from a “comprehensive first ranking security package” over the assets of the KrisEnergy group, and that it is now implementing recovery plans to preserve KrisEnergy’s assets and maximise recoveries.

“Amongst other things, this will include imminently using that security package to appoint Patrick Bance, Mitchell Mansfield and Kent McParland each of Borrelli Walsh as joint and several receivers over the assets of a number of members of the KrisEnergy group including over the shares in and assets of KrisEnergy (Asia),” states Keppel.

Keppel’s investment in KrisEnergy - including contract asset, loan receivable, and the amount outstanding under a revolving credit facility to KrisEnergy to which KCL has provided a guarantee - has a carrying value totaling approximately $423.3 million as of March 31.

Following Keppel’s evaluation of the potential financial impact from the winding-up of KrisEnergy and the estimated recoverable amounts, Keppel will recognise a loss of $318 million in its 1HFY2021 ending June financial results.

The recoverable amounts will be re-assessed at the end of each financial reporting period. 

“When considering the declaration of interim and final dividends for the current financial year, the Company will take into account, inter alia, available profits and cash flows after ring fencing this impairment loss on this non-core investment,” Keppel added.

Shares in Keppel closed up 3 cents or 0.56% higher at $5.35 on June 7.

Photo: Keppel Corp