South Korea's Daewoo Shipbuilding and Marine Engineering Co., Ltd. (DSME) terminated a construction contract for the Cobalt Explorer (UDW drillship), the shipyard said in a filing with the Korea Exchange Wednesday.
"The ship owners did not implement the interim payment to us," DSME indicated in the filing with the stock exchange, adding that on the basis of Article 11, the contract is being terminated due to a breach of contract by the owner.
DSME signed the $562.72 million (KRW 703.4 billion) contract to build the drillship on July 18, 2013 with Vantage Drilling Co.
Earlier on Aug. 13, Vantage Drilling said it "will seek to recover all funds paid to the shipyard totaling approximately $59.5 million plus contractual interest and any other amounts due under applicable law ... the shipyard may seek to challenge our ability to terminate the contract pursuant to arbitration provisions in the contract, which would result in a delay in recovery of any amounts that might be due to us under the contract."
The drilling firm added that "the shipyard itself may seek to terminate the contract for our failure to make the second milestone payment for the Cobalt Explorer under the contract. Such termination by the shipyard might entitle the shipyard to retain all supplies delivered to the shipyard and all milestone and other payments made by us to the shipyard to date, and to elect to sell the vessel and claim any deficiency in proceeds against us. We may consider future alternatives with the shipyard for the delivery of the Cobalt Explorer. However, there can be no assurances that the terms and conditions of any such alternatives will be acceptable to us or the shipyard."
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