SEMBCORP Marine (Sembmarine) S51 : S51 0%on Friday (Dec 24) announced that its wholly-owned subsidiary Jurong Shipyard has received a notice of commencement of arbitrations from a vendor over 4 separate contracts.

The vendor is alleging breach of the contracts, which are for the supply of equipment for some of Jurong Shipyard's projects.

Under these contracts, it is claiming payment for invoices amounting to US$76 million plus other costs and interests, which Sembmarine said "remain to be proved" by the vendor.

According to Sembmarine, Jurong Shipyard, which provides services such as ship repair, shipbuilding and ship conversion, maintains that these contracts have been validly suspended or terminated.

The group also said both parties were previously in discussions over the payment claims for such suspension or termination, but have yet to reach an agreement.

Jurong Shipyard has engaged legal advisers for the arbitration proceedings and will defend all claims made against it, said Sembmarine.

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The latest development is another blow to the embattled offshore and marine company, which is having a difficult year battling pandemic-related supply chain disruptions and labour issues.

Sembmarine said in a third-quarter update that it continues to face Covid-19 supply chain constraints and shortages of skilled workers. 

These were "seriously affecting" its projects, delaying the scheduled completion of several projects between 1 and 3 months.

Sembmarine’s shares appear to be trading well below their “estimated value range”, which was deemed to be between S$0.125 and S$0.14 per share by its independent financial adviser.

It has been more than 4 months since shares of Sembmarine traded close to the bottom end of this estimated value range. Shares of Sembmarine trading have traded closer to Temasek’s offer price of S$0.08 instead.

The counter closed flat at S$0.082 on Dec 24, after the news. 

READ MORE: 

• Sembmarine updates vaccination records of 53% of its workers in Westlite dorm as verification continues

• Temasek's offer for Sembmarine turns unconditional

• Sembmarine expects significant H2 loss with supply chain crunch

• Sembmarine apologises to Jurong dorm residents, in the process of verifying workers' vaccination status