Singapore’s Emas Offshore and Malaysia’s Perisai Petroleum Teknologi have reached a settlement agreement in a dispute over put options in their joint venture SJR Marine.
Oilfield services provider Perisai holds 50% interest in SJR Marine with an option to sell the entire share to Emas, which already holds the remaining 49% interest.
Since early October 2016, Emas and Perisai were in discussions and working towards resolving various issues, including in relation to the put option.
In mid-October, Perisai declared itself insolvent after failing to pay its interest to noteholders. Perisai said it was operating under adverse financial conditions.
On December 1, 2016, Emas announced that it had reached an interim agreement with Perisai to defer the exercise of the put option to after close of business on December 8, 2016.
Despite efforts made by the parties, Emas and Perisai had yet to fully resolve the various issues amongst themselves.
On December 8 Emas terminated the put option. On the same date, Perisai issued a letter to Emas disputing the termination and further issued a put option notice to Emas seeking to exercise its put option rights, requiring Emas to acquire the put option shares. Emas in turn disputed Perisai’s exercise of its put option rights.
Accordingly, the parties had actual and potential disputes, differences, claims and counterclaims against each other arising from or in connection with the SSA and/or the Put Option rights
On Friday, December 23, 2016, Emas and Perisai entered into a settlement agreement to achieve a full and final settlement of their disputes.
The main terms of the settlement agreement require from Perisai to sell and Emas to buy the put option shares and upon the delivery of shares Emas will pay part of the consideration amounting to $20 million to Perisai.
Subject to completion, the total consideration for the put option shares amounts to $43 million. The completion date will be the next business day, or any other business day as the parties may agree, following fulfilment (or waiver) of the last condition precedent, which will be within a period of up to four months from the date of the settlement agreement. Further extension may be requested.
The completion is subject to several conditions including Perisai’s obligation to provide Emas with evidence of the approval of its board of directors and shareholders for the sale of put option shares to Emas which will in turn provide evidence it has obtained a $20 million loan for the purpose of buying the put option shares and a loan of $1.5 million for the working capital.
Emas noted that if completion does not occur by set completion date, the settlement agreement will be terminated in its entirety.
Offshore Energy Today Staff