By CONRAD TAN
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KEPPEL Corp said that a customer has cancelled a $181 million shipbuilding contract with one of the group's units due to financing difficulties - the latest casualty of the financial crisis.
Keppel Singmarine Pte Ltd, the specialised shipbuilding arm of Keppel Offshore & Marine, received notice to end the contract for the GSP Titan, a multi-purpose vessel suited for laying oil pipelines and lifting heavy equipment onto oil platforms, from the ship's Romanian owner. 'The cancellation of the contract is due to the owner's difficulties in securing project financing as a result of the current tight credit situation,' KepCorp said.
But Keppel Singmarine has already received milestone payment for the project, which covers costs incurred as well as the expected loss of profit from the cancellation, KepCorp said.
The cancellation of the contract is not expected to have a material impact on KepCorp's earnings or net tangible assets for the current financial year, it added.
Last week, KepCorp said that the group earned $285.3 million in net profit for the first three months of the year, up 9 per cent from a year earlier. The offshore and marine division's orderbook at end-March stood at $9.5 billion, with deliveries extending into 2012.
The contract to build the GSP Titan was awarded to Keppel Singmarine in July last year and is still at the early stages of execution. It was ordered by Romania's Grup Servicii Petroliere, which provides specialised offshore drilling and oil rig maintenance services, and is part of the privately owned Upetrom Group.
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