STEng – BT
ST Marine gets letter of claim on Ropax contract
ST Marine intends to dispute Louis Dreyfus Armateurs’ $63.5m claim
ST ENGINEERING’s marine arm ST Marine has received a letter of claim from the lawyers of Louis Dreyfus Armateurs (LDA) for an alleged breach of contract.
In the letter dated June 10, LDA is claiming some $63.5 million – $4.8m for liquidated damages for alleged delivery delay and a sum indicated as about 33.03 million euros ($58.7 million) for unliquidated damages arising from ST Marine’s purported breach of a shipbuilding contract.
‘ST Marine is taking legal advice on the claim and intends to dispute the claim,’ ST Engineering said yesterday.
The bone of contention was a contract for a roll-on/ roll-off passenger ferry (Ropax) worth $179 million (inclusive of variable options) inked in July 2007.
LDA had terminated the contract in March this year, citing a delay in the delivery of the Ropax vessel. It further alleges that even if the vessel is tendered for delivery, there will be deficiency in the deadweight capacity of the Ropax vessel.
The first notice of termination was issued by LDA on March 17. In a second notice of termination on March 24, LDA called on the refund guarantees, which require the milestone payments paid to ST Marine amounting to $129 million plus interest to be refunded.
‘As stated in the previous announcement on 24 March 2011, ST Marine is of the view that LDA’s purported termination of the Ropax contract is a breach and ST Marine itself has terminated the Ropax contract on the basis of LDA’s breach and accordingly has reserved all its rights in the matter,’ ST Engineering said yesterday.
ST Marine also reiterated its position that if liable, its total liability under the terms of the Ropax contract is capped at 10 per cent of the contract price. Hence, no material impact is expected on the consolidated NTA per share and EPS of ST Engineering for the current financial year.