Shares of embattled rigbuilder Sembcorp Marine slide further on contract 'standstill'

Sembcorp Marine shares slid further today (Dec 3) after the rig builder reached a "standstill" agreement with North Atlantic Drilling.
Sembcorp Marine shares slid further today (Dec 3) after the rig builder reached a "standstill" agreement with North Atlantic Drilling.PHOTO: SEMBCORP MARINE

SINGAPORE - Sembcorp Marine shares shed another 4.4 per cent today after the rig builder announced it had reached a so-called "standstill" agreement with a rig customer, North Atlantic Drilling.

The counter hit a six-year low on Wednesday after the company announced it expected to post its first quarterly loss since 2003.

Under the standstill agreement, which applies until June next year, North Atlantic will continue to market the rig for an acceptable drilling contract.

For its part, SembMarine's unit Jurong Shipyard will have the right to sell the rig for an acceptable price.

During this period, the rig will remain at Jurong Shipping's shipyard in Singapore.

If at the end of this period, no contract has been secured by North Atlantic, and no sale made by Jurong Shipping, the parties have agreed to mount a joint venture.

The joint venture would be 23 per cent held by North Atlantic and 77 per cent owned by Jurong Shipping.

After that, North Atlantic would continue to market the rig, and Jurong Shipping would continue to try to sell the unit.

At 11.45am, SembMarine shares had fallen 4.4 per cent or nine cents to $1.97.