Perdana Petroleum Berhad (PPB), a Malaysian offshore marine services provider, disclosed Wednesday that the company has cancelled an order for an accommodation work barge being built by Singapore-listed Nam Cheong Ltd., citing current market conditions for its decision.
In June 2014, Perdana Petroleum had placed the orders for two 500-men accommodation work barges, identified as Vessel Hull No. SK 316 and SK 317 from Nam Cheong Limited, for $84 million.
"The Board of Directors of PPB wishes to announce that the Company has on March 28, 2016 sent notification to Nam Cheong International Ltd. of the Company’s termination/cancellation of the MOA (Memorandum of Agreement) dated June 23, 2014 on the acquisition of the accommodation work barge identified as Vessel Hull No. SK 316," it said in a filing with local stock exchange Bursa Malaysia.
"The termination is necessary as to-date there has been no potential charter contract identified for the vessel SK316. The Board is of the view that by accepting the delivery of the vessel SK316, PPB Group will have to incur additional operating costs and finance costs for servicing the loan, thereby putting unnecessary strain on the PPB Group’s balance sheet and cash flows especially if the new vessel, SK316 remains idle for a prolonged period," the company added.
Perdana Petroleum said it has written-off $9.2 million (MYR 36.1 million), which was the 20 percent deposit for the vessel SK316 in the financial year that ended Dec. 31, 2015.
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