Sembcorp Marine’s subsidiary Jurong Shipyard has signed an agreement for the sale of the semi-submersible rig West Rigel to a buyer at a price of $500 million.
Under the terms of the agreement, the sale is subject to conditions precedent being met by both parties before the delivery of the rig and the payment of the price. Once the conditions precedent are fulfilled, the buyer will take delivery of the rig but the rig will remain in the company’s yard for certain works to be undertaken for reactivation, SembMarine said on Tuesday.
West Rigel was originally contracted by North Atlantic Rigel Ltd (NARL), a subsidiary of North Atlantic Drilling Ltd (NADL) and Seadrill. Both Seadrill Ltd and NADL have applied for restructuring under Chapter 11 in the United States.
NARL and Jurong entered into a standstill agreement in December 2015, and have extended the agreement to July 2018. During the standstill period, NARL was to market the rig for an acceptable drilling contract and Jurong for the sale of the rig at an acceptable price. The rig was to remain at the Jurong yard in Singapore during this period. In the event that no employment is secured and no alternative transaction is completed when the standstill period concludes, the parties were to form a Joint Asset Holding Company for joint ownership of the rig.
SembMarine added that, if the above sale materializes, it will result in a loss of approximately S$24 million. Had this transaction occurred in the financial year ended December 31, 2016, it would have the effect of reducing the company’s 2016 earnings per share by S$0.012 but would not have any material impact on the net tangible assets of the company for the financial year ended December 31, 2016.