Seatrium, on June 20, announced that its wholly-owned subsidiary Seatrium New Energy and RigCo Holding have entered into a settlement agreement with Awilco Drilling PLC, Awilco Rig 1 (AR1), and Awilco Rig 2 (AR2).
As the full and final settlement of the two arbitration awards, AR2 will receive a settlement sum of US$57 million ($77 million).
The settlement will come from the asset-holding company, Rigco Holding, since the rigs were transferred to the company, based on the circular on the proposed combination between Seatrium (then Sembcorp Marine or SembMarine) and Keppel Offshore & Marine (Keppel O&M). In the circular dated Nov 23, 2022, Keppel O&M’s legacy rig assets, associated receivables and associated intercompany loans owed by the Asset Co target companies were transferred to Rigco Holding as part of the conditions for the proposed combination.
Rigco will also pay for the legal fees and costs incurred by Seatrium New Energy relating to the arbitrations for AR1 and AR2.
The arbitration commenced in June 2022 when Awilco failed to make an instalment payment for a contract worth some US$425 million for the construction of a mid-water submersible drilling rig for harsh environment use.
On April 24, 2023, SembMarine announced that the arbitration award was made in favour of Keppel FELS, SembMarine’s wholly-owned subsidiary.
See also: Seatrium partners with Cochin Shipyard with an eye on India's rig market
Another arbitration award was made against Seatrium New Energy in November 2023 for another arbitration between the company and
Subsequently, an arbitration award was received in November 2023 for another arbitration between Seatrium New Energy Limited and AR2. The award was in respect of the contract executed in March 2019 for the construction of a repeat midwater semisubmersible drilling rig, B382. The second award was made against Seatrium New Energy.
The settlement agreement is not expected to impact Seatrium’s net tangible assets (NTA) or earnings per share (EPS) for the FY2024 ending Dec 31.
Shares in Seatrium closed 1 cent lower or 0.66% down at $1.50 on June 19.
