Perdana Bails Out of Vessel Deal with Nam Cheong
Nam Cheong, Malaysia’s offshore support vessel builder, has received a notice of termination from Perdana Petroleum’s subsidiary, Petra Offshore, purporting to terminate the contract for the sale of one Accommodation Work Barge (AWB).
Nam Cheong entered into a contract with Petra Offshore for two AWBs, worth $84 million, in June 2014. The contract included the option to purchase another two vessels.
The group’s position is that the purported notice is not valid and is tantamount to a repudiation of the contract by Petra Offshore, pursuant to which the company is entitled to compensation from Petra Offshore, the company said in a statement.
Nam Cheong emphasized it intends to fully enforce its rights against Petra Offshore and, if necessary, seek legal redress.
The purported termination/cancellation of the contract is expected to have an impact to the earnings of the group for the financial year ending December 31, 2016, the extent of which cannot be conclusively ascertained at this juncture, as it will depend on the outcome of the company’s legal remedies against Petra Offshore.
Termination ‘necessary’
Perdana Petroleum explained that the termination was necessary as to-date there has been no potential charter contract identified for the vessel AWB, identified as Vessel Hull No. SK 316.
The company added that the board is of the view that by accepting the delivery of the vessel SK316, Perdana Petroleum would have to incur additional operating costs and finance costs for servicing the loan, thereby putting unnecessary strain on the group’s balance sheet and cash flows especially if the new vessel, SK316 remains idle for a prolonged period.
In view of the current market conditions, the Company has decided to terminate / cancel the MOA for this vessel.
