GLOBAL offshore group Keppel FELS has terminated its contracts with TS Offshore and Crystal Heights Holdings, which amount to over US$585 million in value.

In March 2014, the group secured an order worth US$500 million from TS Offshore to build TS Jasper Vessel, a rig that would work in waters up to 500 feet deep.

It also secured a contract for the Sapura Raiqa Vessel in January 2015, and a US$85 million contract from Crystal Heights Holdings to build a high-specification liftboat in July that year.

In a bourse filing on Friday (Aug 5), Keppel Corporation said that for the contracts involving the TS Jasper Vessel and the liftboat were terminated because of the “failure” of their respective clients to pay the outstanding amounts due and payable under each of the relevant contracts.

Keppel FELS is a subsidiary of Keppel Corp's offshore and marine arm.

In the matter of the Sapura Raiqa Vessel, Keppel Corp said the client’s conduct showed that it “no longer intends to perform its remaining obligations under the relevant contract, including, but not limited to, accepting delivery of the rig and making the remaining payments”.

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Following termination, Keppel FELS will retain all payments received to date under the relevant contracts, and will retain ownership of the TS Jasper Vessel and the Sapura Raiqa Vessel, including the right to sell them, Keppel Corp said. It added that the construction of the liftboat for Crystal Heights has not and will not be commenced.

The termination of these contracts is not expected to have any material financial impact on the earnings per share and net tangible asset per share of the company for the current financial year.

Following the proposed merger of Keppel Offshore & Marine and Sembcorp Marine, the TS Jasper Vessel and the Sapura Raiqa Vessel will be transferred to the newly established asset-holding company, Rigco Holding.

Shares of Keppel Corp closed S$7.05 on Friday, up S$0.02 or 0.8 per cent, before the announcement.