Keppel O&M subsidiaries receive request for arbitration in US$42.5m dispute

KEPPEL Corp said on Wednesday that two wholly-owned subsidiaries of Keppel Offshore and Marine (O&M) have received a request for arbitration from a counter party to two contracts.

In an exchange filing, Keppel Corp said the counter party to the engineering, procurement and construction contracts relating to floating production storage and offloading units has withheld around US$11.3 million due to the subsidiaries under the contracts.

Keppel Corp disclosed that the counter party has also asked for a further payment of around US$31.2 million from the subsidiaries, claiming to be entitled to a price reduction under the contracts.

Keppel Corp said the subsidiaries, in consultation with legal advisors, deny the counter party's claimed right to such price reductions and "vehemently challenge" the counter party's right to withhold payments due, as well as the "supposed right to claim such price reductions".

The Keppel O&M subsidiaries intend to "vigorously defend the claim and in addition, seek remedies, including counter-claims for the sums unduly withheld", Keppel Corp said.

Shares of Keppel Corp closed at S$5.20 on Wednesday, up S$0.02 or 0.4 per cent, before the announcement.