Vard Holdings agrees to cancel vessel contract with Norwegian firm

SINGAPORE-LISTED Vard Holdings has agreed to end a shipbuilding contract with Rem Offshore in return for compensation, which will include shares in the Norwegian firm.

The 800 million kroner (S$127 million) contract was secured from Rem in June 2014 for one offshore construction and anchor handling vessel.

The agreement to terminate the contract is part of a restructuring plan agreed in principle between Rem and its bank lenders, major bondholders, and main stakeholders, said Vard in an announcement to Singapore Exchange on Tuesday.

As part of the compensation, Vard will receive shares equal to approximately 4 per cent of the total issued shares in Rem post-restructuring.

Rem, an operator of offshore supply vessels primarily in Norway and listed on Oslo Stock Exchange, announced separately that it was undertaking an overall restructuring plan to strengthen its balance sheet and liquidity position.

Effectiveness of the termination is contingent on the restructuring plan being approved.

The vessel delivery was originally scheduled for the first quarter of 2016 but had been postponed until the first quarter of 2018. The vessel is in an early stage of construction.

Vard said it was evaluating the financial impact which will be disclosed in the unaudited results for the second quarter ending June 2016.

The counter closed unchanged on Monday at 16.3 Singapore cents.