Keppel : Minutes of Extraordinary General Meeting 2022

KEPPEL CORPORATION LIMITED

MINUTES OF THE EXTRAORDINARY GENERAL MEETING OF THE SHAREHOLDERS OF KEPPEL CORPORATION LIMITED (THE "COMPANY") HELD BY ELECTRONIC MEANS ON THURSDAY, 8 DECEMBER 2022 AT 3.00 P.M.

PRESENT
Mr Danny Teoh	Chairman
Mr Loh Chin Hua	Executive Director/Chief Executive Officer
Mr Till Vestring	Director
Ms Veronica Eng	Director
Prof Jean-Francois Manzoni	Director (via web conference)
Mr Teo Siong Seng	Director (via web conference)
Mr Tham Sai Choy	Director
Mrs Penny Goh	Director
Mr Shirish Apte	Director (via web conference)
Mr Jimmy Ng	Director
Mr Olivier Blum	Director (via web conference)
IN ATTENDANCE
As per attendance list.

Chairman extended a warm welcome to all shareholders of the Company ("Shareholders") and attendees who had joined the virtual extraordinary general meeting ("EGM") by webcast and audio means.

QUORUM

As there was a quorum, Chairman called the EGM to order.

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INTRODUCTION OF THE BOARD AND MANAGEMENT

Chairman introduced the members of the Board and management who were present.

WELCOME ADDRESS

Chairman informed the meeting that there were two items on the agenda, which was to seek Shareholders' approval for (1) the Proposed Transaction involving the Asset Co Transfer and the Proposed Combination of Keppel Offshore & Marine Ltd ("KOM") and Sembcorp Marine Ltd ("SCM"), and (2) the Proposed Distribution.

TAKING DOCUMENTS CIRCULATED TO SHAREHOLDERS AS READ

The Notice of EGM and the Circular, having been circulated to Shareholders earlier, were taken as read.

A video was shown on how to use the audio-visual platform to submit questions and votes during the EGM.

MANAGEMENT PRESENTATION

Chairman then invited CEO, Mr Loh Chin Hua, to present the management update.

CEO welcomed Shareholders to the EGM and thanked them for the questions submitted ahead of the EGM.

Noting that the merits of the Proposed Transaction and Proposed Distribution were addressed in earlier disclosures and briefings and in the Company's responses to the substantial and relevant questions from shareholders, all of which had been posted on the SGXnet prior to the EGM, CEO provided an update that since then, the Company had obtained the approval of the Maritime and Port Authority of Singapore for the Proposed Transaction and had therefore received all the required regulatory approvals on the Company's part.

CEO then provided a recap of the rationale for this transaction from the perspective of the Company, the Shareholders, and the combined group comprising KOM and SCM.

Rationale of the Proposed Transaction & Proposed Distribution for Keppel, Keppel's shareholders and the combined group

CEO noted that the Proposed Transaction would accelerate the Company's Vision 2030 transformation by helping to streamline, focus and align the group to the Company's mission to provide solutions for sustainable urbanization, and scale up in focused areas, such as renewables, clean energy and decarbonisation solutions.

From the Company's perspective, the transaction would yield a realizable value of about S$9.05 billion over time from the O&M business and legacy assets.

Secondly, eligible Shareholders would receive 49% of SCM shares, or 19.1 SCM shares for every Keppel share held, which has an implied value of S$2.33 per Keppel share, based on the value of SCM shares at the point in time when the transaction was announced in April 2022 of 12.2 cents. The final value of shares would depend on the trading value of the post-transaction SCM.

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Finally, from the point of view of the combined group, the Proposed Transaction was expected to create a premier global player providing offshore renewables, new energy and cleaner solutions in the O&M space. KOM and SCM's combined total net orderbook of over S$18 billion would provide post- transaction SCM a strong base to compete and seize new opportunities in the areas of offshore renewables, new energy, and cleaner O&M solutions.

Realisable Value from Proposed Transaction

The transaction would see a realisable value for the Company of over S$9.05 billion over time. Keppel would receive an Asset Co Consideration of S$4.06 billion, S$4.50 billion in value from the 54% stake in SCM on a fully diluted basis, as well as S$500 million in cash.

This did not include approximately S$300 million in out-of-scope assets, namely the Company's shares in Dyna-Mac and Floatel, which would continue to be held by the Company.

Taken together, the total value of the Company's O&M business would be about S$9.35 billion, or approximately S$5.34 per Keppel share.

Vision 2030 - Building the Future Keppel

CEO noted that moving forward, the Company would not just be an asset manager but also an operator with strong development and operating capabilities in energy and environment, urban development and connectivity.

The Company was moving towards making sustainability its business. The Company's asset-light business model allowed growth of its business portfolio without overburdening its balance sheet. Since July 2022, the Company had announced S$2.4 billion in new investments, jointly undertaken by the Company and its managed funds and business trust, mainly in renewables, decarbonisation and environmental solutions. Even with this significant investment, the Company's net gearing has stayed quite steady because of its asset-light model.

Technology and innovation would continue to be key enablers for the Company to enhance value propositions to the Company's ultimate customers and achieve Vision 2030 plans.

In conclusion, CEO noted that sustainability, being asset light, and harnessing technology were the three business thrusts that the Company would become more involved with moving forward.

QUESTIONS AND ANSWERS

With the conclusion of CEO's presentation, Chairman proceeded with the Q&A session. He noted that the Company had published its responses to substantial and relevant questions received from Shareholders prior to the EGM on its corporate website and SGXnet and some of these questions had also been addressed during CEO's presentation. Nevertheless, Shareholders attending this EGM via the audio-visual webcast platform could submit additional questions through the live Q&A function via the platform.

Chairman then invited Shareholders to submit their questions. The questions and responses were as below:

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1. Why are shareholders voting on the sale of KOM and the distribution in-specie of the SCM shares when the transaction has not yet been approved by the SCM shareholders?
   Chairman explained that both KOM and SCM shareholders needed to approve the transaction. While the Company has started with its EGM, SCM would proceed with its EGM which it has indicated that it would hold before the end of the year.
2. Why did the Company not settle for a cash consideration instead of SCM shares?
   CEO explained that the transaction negotiated and agreed with SCM involved shares as the main form of consideration but noted that prior to the transaction being completed, the Company would receive S$500 million in cash as well.
3. Who is advising Shareholders that the transaction would improve the overall equity value of the Company post-transaction plus the new shares in SCM? When will Shareholders see the valuation analysis of the proposed transaction?
   CEO explained that, as covered in his opening presentation, the transaction would unlock quite considerable value for the group, which CEO believed would lead to a re-rating of how the market looked at the Company. More importantly, besides financial impact whereby the transaction was accretive and financially attractive, CEO stated that he believed that the transaction would help accelerate transformation towards Vision 2030 and get the Company to its eventual ROE target of 15% in due course.
4. For Resolution 2, is the ratio for the proposed distribution of dividend in specie finalised? If not, when would it be finalised, and what would be the final ratio [of SCM shares] per 1 Keppel share?
   Chairman explained that the ratio has been finalised. For every 1 Keppel share that a Shareholder owns, the Shareholder would receive 19.1 SCM shares.
5. What are the major developments that would have an implication on share price?
   Chairman said he was not sure which share price the Shareholder was referring to, but explained that it would be necessary to wait until completion of the transaction and that it would be for the market to determine where share prices would land.
6. Would the Company be raising dividends next year?
   Chairman said that this transaction was a non-cash transaction. Apart from the S$500 million cash that the Company would receive, substantial consideration to the Company for the whole transaction would be the new shares issued by SCM. In looking at dividends on an annual basis, the Board would look at operating performance and some of the Company's investment plans. Chairman added that the Board was mindful that dividends are important to shareholders.
7. How will shareholders benefit from the 4.06 billion (Asset Co) side of the S$9 billion transaction?
   CEO said that in exchange for legacy assets sold to Asset Co, the Company would receive just over S$4 billion in credit notes. Over time as the rigs in Asset Co were monetized, the Company would be paid the credit notes. As shared in recent briefing to Shareholders, with the improvement in the offshore market, utilization and day rates of rigs were improving, and three Borr rigs were recently sold to a Middle Eastern customer. Over time as the rigs were monetized, it was expected that the credit notes and accrued interest would be paid back to the Company, and such amounts would be used by the Company to fund further growth and dividend payouts in future.

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1. How would the remaining 5% of SCM shares held by the Company be used? What are the Company's options as regards such shares? Will such shares be distributed to Shareholders?
   Chairman explained that the 5% of SCM shares held by the Company was held back in view of certain contingent liabilities of KOM. Such shares would become "unencumbered" at the end of 48 months or the extinguishment of contingent liabilities, whichever was earlier. At such time that they became "unencumbered", the Board and management would deal with these shares.
   Such shares could be distributed to Shareholders or be sold; they could be recycled as working capital of the organization. It was too early to give a definitive answer to this situation.
2. Why is KOM paying S$500m cash to the Company instead of SCM?
   CEO explained that this S$500M was for KOM to repay a part of certain advances (perpetual securities and other shareholder loans) which had been provided by the Company to KOM to fund certain shortfalls in the funding of KOM in recent years. The balance [amounts owed by KOM to the Company] would be equitised before KOM was transferred to SCM, less any outstanding third party debts.
3. Does the Company have any plans to divest the balance stake of its O&M business units, for example Floatel and Dyna-Mac? If not at present, is there a timeline to divest?
   Chairman said that this was not something that could be confirmed at the moment but it was good that the market was developing positively. At the appropriate time, the Company would make the necessary announcements if such transactions were warranted.
4. What will be the valuation of the Company post-divestment of KOM? Are there any comparable companies to compare with?
   Chairman said that CEO had explained what the Company aimed to become post-completion of the transaction - a global asset manager with strong development and operating abilities in sustainable urbanization - and there were not many comparable companies. One of the things the Company was working towards was for the complexity of the Company to be much more easily understood by focusing on its asset management business in these areas.
   CEO added that this was part of Vision 2030 as the Company moved away from lumpy profits and orderbook businesses to more recurring income. When the Company has lumpy or net orderbook businesses, it tended to be valued by the market - although it should be valued on DCF, analysts tended to take shortcuts by looking at price to book. So the Company was moving towards more recurring income businesses that would attract a higher earnings multiple. This was the general direction the Company was taking with Vision 2030. Since the announcement of the transaction in April 2022, the Company has started to see analysts start to realise the value that the Company could potentially unlock. Quite a number of analysts had re-rated the Company through their "sum of the parts" valuation. That was where the Company was headed.
5. Management had suggested that the restructuring of the deal from a merger to an outright acquisition would reduce the time to complete the deal by about 2 months. However, considering SCM has yet to initiate an EGM to get their shareholder permissions, is it still realistic that the deal can be completed by end of December / early January?
   CEO said that assuming the EGM passed the two resolutions that were in front of the Shareholders today, this would complete all the regulatory approvals from the Keppel side. As noted by Chairman, SCM still had to go through with their EGM. If that could be called before the end of 2022 or in January 2023, assuming that was also approved, completion could take place quite shortly after as the transaction was structured as an acquisition and there was therefore no need to go through the court process which would have taken a bit longer. The

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