Published April 30, 2009

SembMarine to sell rig after owner fails to pay up

PetroMena facing liquidity problems and is in a tussle with bondholders

By VINCENT WEE

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SEMBCORP Marine subsidiary Jurong Shipyard, which has completed a US$423 million deepwater semi-submersible rig, yesterday terminated the contract as its customer has failed to make the final payment.

The rig, PetroRig I, was ready for delivery to PetroMena's subsidiary, PetroRig I Pte Ltd, early this month, SembMarine said, but the PetroMena unit was unable to make final payment.

The contract signed in October 2005 gave Jurong Shipyard the right to sell the rig because of the payment default. Jurong Shipyard will proceed to offer the sixth generation ultra-deepwater semi-submersible Friede & Goldman Ex-D design rig for sale.

It is believed that PetroMena had recently signed a memorandum of understanding to sell the rig to an international buyer for US$450 million. The company is, however, known to be facing liquidity problems and is currently embroiled in a tussle with bondholders, possibly explaining its inability to complete final payment.

PetroMena has two other similar rigs on order with SembMarine due for delivery later this year and early next year respectively. Reuters reported in February that PetroMena had a conditional offer to sell the third rig for US$540 million. It is believed that the company plans to keep the second rig for itself.

SembMarine declined to reveal the value of the final payment. However, it is understood that over 50 per cent of the total has been collected for all three rigs and that the outstanding amount for PetroRig I comes to just over US$200 million.

'Based on best known information, Jurong Shipyard is confident that it will be able to sell the rig and to recover all outstanding amounts owed to the shipyard,' said SembMarine. 'The event will not have any material impact on SembMarine,' it added.

Problems started emerging at PetroMena in February as nervous bondholders started circling over the oilfield services company as its share price plunged ahead of its fourth quarter results. An informal steering committee of bondholders had then called a meeting to provide trustee Norsk Tillitsmann with the authority to appoint a broker to sell PetroMena's rigs if that became necessary. It is unclear if a broker has since been appointed.

SembMarine shares closed five cents higher at $2.04 yesterday.