Seatrium, Maersk resolve contract dispute with giant line to pay US$360 million upon vessel delivery

[SINGAPORE] Offshore, marine and energy specialist Seatrium has reached an agreement with buyer Maersk Offshore Wind’s affiliate Phoenix II to pay the balance of the contract price – valued at US$360 million – upon delivery of a vessel.

This deal comes after the group started its own arbitration proceedings against the buyer in November, against a “wrongfully terminated” US$475 million contract in 2022.

Seatrium said in a statement on Monday (Dec 22) that the wind turbine installation vessel involved in the contract will be delivered by Feb 28, 2026.

Both parties agreed for the Maersk affiliate to pay part of the contract price – US$250 million – using an interest-bearing credit arrangement. This was extended to the buyer by the company’s wholly owned subsidiary, Seatrium (SG).

The credit arrangement is for up to 10 years and repayable through cash generated by the vessel.

Seatrium said its subsidiary will have a mortgage over the vessel, as well as first priority rights over the vessel and the Maersk affiliate’s bank accounts.

Earlier in October, the group received a termination notice for its contract with the Maersk affiliate for the construction of the wind turbine installation vessel at a US offshore wind farm. This project was scheduled to be completed in the early part of 2025.

Both parties will withdraw and discontinue all legal proceedings following Monday’s announcement, with the contract in full force and effect.

Seatrium does not expect the latest development to affect its net tangible assets and earnings per share for the current financial year ending Dec 31. It will make further announcements as and when there are material developments.

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Seatrium to start its own arbitration in US$475 million contract termination dispute 

More pros than cons, says Citi

Citi analyst Luis Hilado noted that although he and other analysts had not expected Seatrium to lose money through the arbitration, the market still views the resolution “positively” due to the removal of the legal overhang.

“We believe this will supersede concerns of being exposed to the operational performance of the vessel,” said Hilado in a note on Monday. “Combined with the revival of its order win momentum, the stage is set for a better 2026 financial year.”

Any potential negative perception of Seatrium will also be addressed thanks to the resolution, he added, setting a target price of S$2.65.

Hilado also said that although the new payment terms technically discounted the contract’s value, the interest charged will likely balance out any hit to 2025 earnings.

Not only that, the deal structure is likely to increase finance income from 2026, but he added that he was waiting to see if Seatrium had the right to sell the vessel to a third party.

Shares of Seatrium closed flat at S$2.07 on Friday.