Sembcorp Marine settles with Sete Brasil over its 7 drillship contracts

SEMBCORP Marine joined Keppel Corp on Monday in announcing a long-awaited settlement with Sete Brasil for rig-building contracts worth billions of dollars that were frozen after the Brazilian company was forced to file for bankruptcy amid a sweeping corruption probe.

In a bourse filing on Monday afternoon, Semcorp Marine said its seven drillship contracts with Sete Brazil subsidiaries worth a total US$5.6 billion will be terminated and the parties will mutually release each other from all claims in relation to the contracts. This is subject to certain prior conditions being fulfilled. 

For five of the seven drillships, Sembcorp Marine will keep all works performed.

The remaining two have made the most construction progress, and will be split between Sembcorp and Sete Brasil in proportion to payments already made by Sete Brasil. Sete Brasil has identified a buyer for its units that own the two drillships. The buyer is expected to negotiate with Sembcorp to enter new contracts to complete the drillships.

Following the settlement, the parties will terminate arbitration proceedings for contract claims begun in April 2016.

Sembcorp Marine said it will make further announcements when all the conditions precedent have been fulfilled and the settlement agreement has become effective.

The company made impairment and provisions of S$329 million for the drillship projects during its fiscal year ended Dec 31, 2015.

Sembcorp's settlement follows Keppel Offshore & Marine's (O&M) own with Sete Brasil, now under bankruptcy protection and a court-approved restructuring, which was announced on Monday morning.

Sembcorp Marine's shares were up S$0.01 or 0.8 per cent to S$1.19 as at 1.34pm.