By JAMIE LEE
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MAKE peace, love perhaps, but not war - that could have been the song that investors of Sembcorp Marine sang religiously.
One could almost hear the shouts of hallelujah when the company announced last week that it had resolved its legal dispute with BNP Paribas (BNPP), and on Christmas Eve, no less.
This is significant because the company can unload a legal burden to focus on the business, which has come under pressure amid weakening economic conditions.
Sembcorp has perhaps also learnt a lesson from another legal tussle earlier that dragged on for more than ten years.
The company announced that it had settled a US$50.7 million claim with French bank BNPP over a forex trading scandal involving Sembcorp's subsidiary Jurong Shipyard Pte Ltd (JSPL).
JSPL had revealed potential losses of up to US$303 million more than a year ago, after the firm's former finance chief Wee Sing Guan allegedly made currency transactions without the approval of the company.
As a result of the settlement, the world's second-largest builder of oil rigs said it would book a US$30 million charge in the fourth quarter of 2008.
This draws the scene involving the banks to a close - the company had earlier booked US$208 million in expenditure in last year's fourth quarter figures from the 10 banks that were also involved and BT understands that this is likely to be the final settlement figure for the banks.
The last act is likely to begin only when the police conclude their investigations of Mr Wee's involvement in these forex transactions, but the market has responded well to Sembcorp Marine's decision to settle its lawsuit with BNPP.
Investors sent the stock up the next trading day after the announcement was made.
The stock rose as much as 3.05 per cent to $1.69 from its opening price on Boxing Day of $1.64, before finishing at $1.66, up 1.22 per cent. It outperformed the Straits Times index, which ended less than one per cent higher.
Shrugging off this legal baggage was a marked difference from another high-profile wrangle, in which Sembcorp Industries battled for more than a decade over a contract to convert a bulk carrier called Solitaire.
The company was commissioned by Swiss company Allseas to convert the bulk carrier into then-the world's largest pipe-laying vessel. At $230 million, the deal was the company's biggest at that point.
But Allseas sued the company in 1995 for delays, while Sembcorp countersued and claimed that these delays were a result of Allseas submitting their plans late.
The company fought the lawsuit for more than ten years over the job, which was reportedly not insured, before the issue was resolved in 2006.
The bitter battle cost the company 350 million euros (S$717.8 million) or about triple the contract value. This also represented nearly three-fifth of its FY2006 net earnings of $1.03 billion, though varying provision amounts had been booked over a span of a few quarters.
It also reportedly threatened its then-merger with (ironically) c.
The company told BT then it had agreed to settle after a 'lengthy arbitration process', adding that 'this process as you would appreciate was not one that was under our control'.
But in this latest forex case, Sembcorp has worked to keep this forex trading incident within its control.
And with rig demand set to decline against the backdrop of falling oil prices and credit tightening, this is certainly not the time to be distracted.
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