Seatrium loses appeal to block US$126.6 million rig contract payment
The group will continue with arbitration to resolve dispute and seek recovery of payment
[SINGAPORE] Seatrium on Friday (Sep 12) said its appeal in the Singapore court to block a US$126.6 million standby letter of credit payment related to a rig contract with a customer has been dismissed.
The offshore and marine energy solutions company said in a bourse filing that the litigation involved a majority-owned joint venture company that was inherited by Seatrium with the merger of Keppel Offshore & Marine and Sembcorp Marine in 2023.
The pre-existing disagreement was over a rig contract, in which the original contract value was adjusted for cost increases, and in which the validity of these adjustments was later challenged.
In September 2022, the customer sought to draw on the letter of credit.
The joint venture had successfully obtained an interim injunction from the Singapore court to restrain any payment under the letter of credit. It also applied for a final injunction to prohibit payment and commenced arbitration proceedings to resolve the contractual dispute with the customer.
With the appeal now dismissed, the customer is entitled to payment under the letter of credit.
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But Seatrium said its joint venture will continue with arbitration to resolve the dispute and seek recovery of the payment.
It added that provisions had already been made in its accounts for the full amount payable under the letter of credit.
The company does not expect the payment to adversely affect its consolidated earnings per share or net tangible assets per share for the financial year ending Dec 31, 2025.
Shares of Seatrium closed flat at S$2.35 on Friday, before the announcement.
