Sembcorp Marine unit further extends standstill agreement for drilling rig

JURONG Shipyard has agreed with its client to delay, for the fifth time, the delivery of a semi-submersible drilling rig by another six months.

Sembcorp Marine, which fully owns Jurong Shipyard, said that the standstill agreement between Jurong Shipyard and North Atlantic Drilling Ltd for the delivery of West Rigel has been extended to Jan 6, 2018, it said in a filing to the Singapore Exchange on Friday.

During the standstill period, North Atlantic Drilling will continue to market the unit for an acceptable drilling contract, and Jurong Shipyard will have the right to sell the unit at an acceptable price.

The unit will remain at Jurong Shipyard's yard in Singapore during this period.

In the event that no employment is secured and no alternative transaction is completed when the standstill period concludes, the parties will form a joint asset holding company for joint ownership of the unit to be owned 23 per cent by North Atlantic Drilling, and 77 per cent by Jurong Shipyard - a point made also in previous standstill agreements.

North Atlantic Drilling will continue to market the unit for the joint asset holding company for an acceptable drilling contract, while Jurong Shipyard will continue to market the unit for sale, said the release.

Sembcorp Marine had first said in December 2015 that the delivery would be delayed till June 2016. It then extended it to September 2016, then to January 2017, and then to July 2017.

Sembcorp Marine's counter was down 0.5 Singapore cent, or 0.3 per cent, to end on Thursday at S$1.685.