AOD Exercises Option for China's CSSC to Build a Zentech R-550D Jackup
Hong Kong-listed TSC Group Holdings Limited announced last week that a subsidiary of the company has ordered a newbuild Zentech R-550D jackup from China's CSSC Huangpu Wenchong Shipbuilding Company Limited for delivery in end 2016 or early 2017.
This announcement is a voluntary disclosure made by TSC Group Holdings Limited (the Company or TSC, together with its subsidiaries, the Group) to provide its shareholders and potential investors with updated operating information in relation to the recent business development of the Group.
Construction Contract (Rig 2)
The board (the Board) of directors (the Director) of TSC Group Holdings Limited (the Company or TSC, together with its subsidiaries, the Group) is pleased to announce that on Sept. 5, Alliance Offshore Drilling Pte. Ltd. (AOD), a wholly-owned subsidiary of the Company, entered into a construction contract for the fabrication, construction, equipping, testing, commissioning and delivery of a Zentech Design R-550D Jackup (Rig 2) (the Contract) with CSSC Huangpu Wenchong Shipbuilding Company Limited (CSSC Huangpu).
Details of the Contract
The principal terms of the Contract include the following:
- Date: Sept. 5
- (i) AOD as the Owner; and
- (ii) CSSC Huangpu as the Builder
- Delivery: Delivery of the Rig 2 is expected to be within 26 months upon the Contract coming into effect before end of October
- Nature of Transaction: Construction of asset, being the Rig 2
- Contract price: Owner shall pay Builder a compensation which will be subject to the final technical scope of the project
- Payment terms: The Contract Price shall be paid by the Owner to the Builder by installments
Reasons for Entering into the Contract
With the continuing positive response received for the first unit of the Zentech R-550D Jackup currently under construction at the CSSC Huangpu Longxue Shipyard, AOD has exercised a further option provided by CSSC Huangpu to build a second unit of the same rig design. The construction of Rig 2 is in accordance with the objectives of the strategic alliance between CSSC Huangpu, Zentech Inc and TSC signed Dec. 3, 2012 to jointly develop and market the R-550D Jackup which is a high performance, three legged, extended reach cantilever type jackup, designed for worldwide service in up to 400 feet water depth. The design features include an extended cantilever
reach, zero discharge, high speed preloading systems, high capacity drilling systems and other high performance features which increase safety and efficiency. The design has been approved by the American Bureau of Shipping and meets requirements of various fast growing emerging markets. A positive sustainable demand will continue for good quality and high specification rigs as older aging rigs are retired from active fleets and drilling requirements increase in deeper water depths.
The transaction arising from the Contract will be conducted in the ordinary and usual course of business of the Company. The Rig is intended either for drilling operations to be undertaken directly by AOD as a drilling contractor on completion of the rig or for sale to prospective customers who have expressed interest in the purchase of the second rig. In the event of sale, the customer will assume the rights and obligations of the construction contract based on negotiated terms. In either of the above events, the Company expects the transaction to provide positive revenue growth to the Group.
Shareholders and investors are reminded to exercise caution when dealing in the securities of the Company.
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- AOD Exercises Option to Build 2 R-550D Jackups at China's CSSC HPWC Yard (Jul 01)
- AOD Exercises Option for China's CSSC to Build a Zentech R-550D Jackup (Sep 15)