Rowan to Appeal Ruling in Lawsuit Over Rowan Halifax
In a regulatory filing with the SEC, Rowan Companies reports the results of a previously disclosed lawsuit regarding the Rowan Halifax. This rig was lost in a hurricane in the summer of 2005. The Company operated the rig under a charter agreement that commenced in 1984 and was scheduled to expire in March 2008. The rig was insured for $43.4 million, a value that the Company believed satisfied the requirements of the charter agreement, and by a margin sufficient to cover the $6.3 million carrying value of Company equipment installed on the rig.
However, the owner of the rig claimed that the rig should have been insured for its fair market value and sought recovery from Rowan for compensation above the insured value.
On November 3, 2005, the Company filed a declaratory judgment action styled Rowan Companies, Inc. vs. Textron Financial Corporation and Wilmington Trust Company as Owner Trustee of the Rowan-Halifax 116-C Jack-Up Rig in the 215 th Judicial District Court of Harris County, Texas. The owner filed a similar declaratory judgment action, claiming a value of approximately $83 million for the rig.
The owner’s motion for summary judgment was granted on January 25, 2007, and if not overturned on appeal, the Company will be liable to the owner for the approximately $40 million difference between the owner’s claim and the insurance coverage.
The Company continues to believe that its interpretation of the charter agreement is correct and intends to vigorously pursue an appeal to overturn the summary judgment ruling.