KS Drilling, Cosco Agree to Delay Delivery of KS Orient Star 2 to 2016
Singapore-listed KS Energy Ltd.'s drilling arm KS Drilling Pte Ltd. and Coso Nantong Shipyard Co., Ltd. -- a unit of Cosco Corp. (Singapore) Ltd.'s 51 percent owned subsidiary Cosco Shipyard Co. Ltd -- agreed to delay delivery of a jackup, the companies said Friday.
Delivery of KS Orient Star 2 (400' ILC) -- a newbuild LeTourneau Workhorse Class design jackup with builder's hull number N408 -- under an amendment agreement has been rescheduled to April 30, 2016 from the original timeline of first quarter 2014.
Under the revised agreement, KS Drilling is entitled to take delivery of the jackup at any time prior to April 30, 2016 and payment shall be made within five working days after rig acceptance. Construction of the jackup has been completed and KS Orient Star 2 is currently ready for delivery.
KS Drilling and Cosoco Nantong have also agreed that "either party shall be entitled to sell the Rig to a third party if the offer could recover their respective costs, or the parties could negotiate in good faith for a compromised solution to sell the Rig," Cosco said in a press release.
The revised agreement added that in the event that: (i) KS Drilling does not take delivery of the jackup or if the jackup is not sold; and (ii) KS Drilling does not order either one LeTourneau Workhorse or one Super 116E design jackup, prior to April 30, 2016, KS Drilling shall pay to Cosco Shipyard interest on any remaining payment at the rate of three month London Interbank Offered Rate (LIBOR) plus 1.5 percent per annum, calculated from May 1 to the date of payment to Cosco Shipyard.
The jackup is one of two KS Drilling ordered from Cosco Nantong in May 2011, with the other -- Excellence I (Kai Zuan Yi Hao) (400' ILC) which it sold to China's ICBC Financial leasing Co., Ltd. for $85 million in June 2014 -- already delivered to the former in 2014.
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