Keppel Corporation announced that the Singapore Court has granted an interim injunction on the morning of Sept 14 to restrain any payment or receipt of money under the standby letter of credit.
This is in reference to the group previously announcing on Sept 13 regarding a customer potential claims arising from disputes over the validity of certain foreign exchange fluctuations and cost escalation contractual formulas in a rig contract entered into by an entity that is 75% owned by Keppel Offshore & Marine, and the application by the KOM entity to the Singapore Court for an injunction to prohibit payment on a US$126.6 million standby letter of credit to the customer.
In the Sept 13 announcement, the group mentioned that a decision made the day before by the relevant government authority that the contractual formulas were invalid, the customer sought to call on the standby letter of credit.
Keppel considers that the decision is still subject to possible modification and is not final, and the call was premature. The KOM entity hence applied for an injunction from the Singapore Court on Sept 12 to prohibit payment on the standby letter of credit. The KOM entity has also filed legal proceedings in the local court to challenge the decision of the relevant authority.
Shares in Keppel closed 2.26% lower on Spet 14 at $7.35.
