On an overall basis, OCBC added, the separation would lower SCI debt levels, given that debt at the SMM-level would be spun-off. As at Dec 31, 2019, including lease liabilities, SMM’s debt was S$3.2 billion, against SCI-consolidated debt of S$11.3 billion.
SCI, excluding SMM, is also likely to see stronger interest coverage. Based on OCBC’s calculations for SMM on a standalone basis, a loss before interest, tax, depreciation and amortisation of S$35.8 million was recorded in Q4 last year. Using Q4 2019 financials as a starting point, by removing SMM’s losses and interest expense and adding back impairments that were reported in cost of sales, Ebitda for SCI was calculated at S$375.8 million in Q4 2019, resulting in an Ebitda-to-interest ratio of 3.2 times, compared with 2.3 times on an SCI-consolidated level, said OCBC.
Leverage levels at SCI are also expected to fall post-separation. After the demerger, SCI’s remaining two segments of energy and urban development would be its key drivers, said OCBC.For daily updates on weekdays and specially selected content for the weekend. Subscribe to
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