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Keppel FELS issues notice of termination of Awilco rig-building contract
RIG maker Keppel FELS has issued a notice of termination with regard to its contract with Awilco and has commenced arbitration to enforce its rights against the company, Keppel Corp said in a bourse filing on Monday evening.
This comes after Oslo-listed Awilco failed to pay an instalment of nearly US$31.9 million due to Keppel FELS on June 9, as part of a rig construction deal.
"Non-payment of any instalment by Awilco is a default in accordance with the contract, entitling Keppel FELS to terminate the contract, retain all payments received to date of approximately US$54 million, seek compensation for the work done to date and claim ownership of the rig," Keppel Corp said.
On June 8, just a day before the payment was due, Keppel FELS received a notice of termination from Awilco alleging certain breaches relating to the project management, schedule, resourcing and compliance.
Since then, Awilco has given further notices to Keppel FELS purporting to terminate the contract and exercise its alleged right to the return of payments already made to Keppel FELS.
Keppel FELS is refuting the allegations by Awilco and has rejected the purported termination of the contract.
"Keppel FELS has continued to perform its obligations under the contract. Awilco has however failed to pay the instalment due on June 9, 2020," Keppel Corp said.
As at June 22, Keppel FELS does not expect any reversal of revenue recognised in respect of the contract, and will continue to work with its advisers on the matter including evaluation of the need for impairment, Keppel Corp said.
Shares in Keppel Corp closed at S$6.04 on Monday, down S$0.05 or 0.8 per cent.