SINGAPORE (Oct 7): After dragging on for some two-and-a-half years, Sembcorp Marine (SembMarine) has finally reached a settlement with Sete Brasil over seven drillship contracts.
The contracts, secured by various SembMarine subsidiaries from Sete Brasil’s subsidiaries, were worth a total of US$5.6 billion ($7.7 billion).
SembMarine in April 2016 had commenced arbitration proceedings against various subsidiaries of Sete Brasil for claims under the contracts. This came after a filing by Sete Brasil for a judicial restructuring in Brazil.
In a bourse filing on Monday afternoon, SembMarine announced that it has now reached full and final settlement of the claims under the contracts, subject to certain preceding conditions being fulfilled.
Upon the fulfilment of the conditions precedent, all seven contracts will be terminated and the parties will mutually release each other from all claims in relation to the contracts.
Following the settlement, the parties will also terminate the arbitration.
For five out of seven of the drillships, SembMarine will retain all the works performed. The remaining two drillships, which have the most advanced construction progress, will be apportioned between SembMarine and Sete Brasil in proportion to payments that have already been made by Sete Brasil.
Sete Brasil was noted to have identified a purchaser for the two drillships, and the purchaser is expected to negotiate with Sembcorp to enter into new contracts to complete the drillships.
Keppel O&M before market open on Monday announced that its wholly-owned subsidiaries Fernvale and FELS Offshore had entered into a similar settlement agreement with subsidiaries of Sete Brasil, with the contracts slated to be amicably terminated with the relevant parties waiving all rights to any claims.
See: Keppel reaches settlement with Sete Brasil on semisubmersible drilling rigs
SembMarine says that it will make further announcements when all the conditions precedent have been fulfilled and the settlement agreement has become effective.
SembMarine also added that this event is not expected to have any material impact on the net tangible assets and earnings per share of the company for the year ending December.
Shares in Sembcorp Marine closed 1 cent higher, or up 0.9%, at $1.19.
