SINGAPORE - Offshore marine contractor Emas Offshore has agreed to avoid a protracted legal dispute with the collapsed Perisai Petroleum Teknologi by entering into an agreement to reach "full and final" settlement of disputes relating to a US$43 million (S$62.2 million) put option.
Emas - a subsidiary of Ezra Holdings - had been in talks with Perisai, a joint venture partner, since October to try to resolve the option contract, inked back in December 2012.
It gave Perisai the right to exercise a put option to sell its 51 per cent stake in subsidiary SJR Marine to Emas for US$43 million. The put was originally exercisable on Nov 26.
SJR is a single purpose company which owns the marine vessel Enterprise 3. The vessel is not on contract. Emas already owns the other 49 per cent of SJR.
The proposed settlement agreement, which will require Emas to fork out US$20 million in cash over the next few months while deferring payment on the other US$23 million for as much as 15 years, "significantly reduces the cash upfront vis-à-vis what would have been under the previous terms of the put option", Emas said on Friday (Dec 23).
Completion of the proposed settlement agreement is conditional upon the satisfaction of certain conditions within a certain time frame, or "long stop period", of four months.
Either party can request for this period to be extended by one month per request, subject to the other party's consent and a maximum four months' extension.
At the end of this long stop period, Emas will pay US$20 million in cash to Perisai and acquire all of Perisai's 51 per cent in SJR Marine.
Emas will pay the remaining US$23 million in instalments, subject to an annual interest rate of 1 per cent which shall accrue from the completion date.
The entire US$23 million will come due 15 years after the US$20 million is paid, or on the date when Emas's payment obligations to OCBC and other lenders have been fully settled, whichever is earlier.
Nine different conditions must be satisfied within the long stop period before the first US$20 million will be paid by Emas to Perisai. These are basically steps for each side to assure the other that it can carry out its side of the deal.
For example, Emas must prove to Perisai that it has obtained a US$20 million secured term loan facility from an existing bank lender to finance the purchase of the SJR Marine shares, along with a US$1.5 million secured term loan facility to use for working capital, to be secured by way of a first ranking charge over Emas's interest in all of the issued shares of SJR Marine.