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Samsung Heavy, DSME cleared to sell Seadrill’s ships to others

Seadrill

Korean shipbuilders Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. (DSME) separately said their contracts on drillship orders with Seadrill Ltd. became invalidated as a result of the U.S. offshore driller’s bankruptcy.

Samsung Heavy said on Monday the U.S. bankruptcy court approved the cancellation of Seadrill’s $1.04 billion order for two drillships in 2013. The shipbuilder would retain the upfront payment of $310 million and secure the rights to sell the ships to recoup the remaining 70 percent of the building cost.

The company said it will engage in talks to sell the ships, which have been ready since March last year, to the original client until May 28 and then look for new candidates.

Seadrill, once the world’s largest offshore driller, filed for Chapter 11 bankruptcy protection last September after a steep drop in crude prices led to a slump in drilling activity.

DSME in a separate regulatory filing said that the U.S. court authorized the termination of Seadrill’s order for two drillships worth $1.1 billion. The ships, which are reported to be 90 to 95 percent completed, were due for delivery next month and January 2019. Similar to Samsung Heavy, the shipyard does not have to return the $220 million upfront fees and would be able to recover the remaining 80 percent by selling the ships to a third party.

A DSME official said it has already reflected the losses so that there would be no additional dent on its balance sheet.

Shares of Samsung Heavy closed Tuesday up 2.8 percent at 8,070 won while DSME shares were down 0.86 percent at 28,750 won.

The Original Posted By Woo Je-yoon and Kim Hyo-jin/Maeil Business News

MACNET Korea