PPL Yet to Receive MP Drilling's Termination Notice for Jackup Construction

Sembcorp Marine Ltd. denied Wednesday that its subsidiary PPL Shipyard Pte Ltd. has received any notice of termination from Marco Polo Drilling (I) Pte Ltd. (MP Drilling) of the $214.3 million contruction contract for the Pacific Class 400 design jackup Iron V (400' ILC) now being built at a yard in Singapore.

"PPL Shipyard has not received any notice of termination of the Construction Contract at the time they learnt of the announcement (Nov. 17)," Sembcorp Marine said in an announcement filed on Singapore Exchange.

"PPL Shipyard disagrees with the allegations in the announcement and will regard this as repudiatory breach of the contract, and will terminate the Contract and claim amounts due under the Contract against MP Drilling and its guarantor Marco Polo Marine Ltd. PPL Shipyard will take the necessary steps to enforce its rights and will provide the update when required."

In an earlier press statement, Marco Polo Marine Ltd. indicated that its unit MP Drilling has issued PPL a notice of termination of the construction contract Tuesday "following the latter's failure to comply with certain of its material contractual obligations."

Marco Polo Marine revealed that MP Drilling has taken into account various factors "including cracks found on all three legs of the New Rig during two rounds of tests, notwithstanding repair works carried out by PPL after the first round of tests."

"In view of the termination of the Rig Construction Contract, MP Drilling will not be taking delivery of the New Rig and it will be seeking, among others, a refund from PPL of the initial amount of 10 percent of the contract price (approximately $21.4 million) previously made to PPL pursuant to the Rig Construction Contract together with interest."

MP Drilling placed the order for the jackup with PPL Shipyard in February 2014, with delivery scheduled for the fourth quarter of this year. The company also holds options for two more sequential units.

Parent company Marco Polo Marine, with its focus primarily on ship chartering operations, indicated then that the rig construction contract "marks the start of a significant leap forward in terms of our operations and service offerings."






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