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Perisai Petroleum settles US$43mil dispute with JV partner

by December 23, 2016 General

KUALA LUMPUR: Perisai Petroleum Teknologi Bhd has settled its US$43.03mil (RM192.56mil) dispute with Singapore-listed Emas Offshore Ltd (EOL), which will give it monies crucial for the success of its debt restructuring plan.

In a filing with Bursa Malaysia, the Practice Note 17 company said it had on Friday entered into a settlement agreement with the oilfield services provider with regards to selling its 51% stake in ship charterer SJR Marine (L) Ltd, which is 49% owned by EOL.

This means Perisai is allowed to exercise a put option and get joint-venture partner EOL to buy the rest of the stake in SJR Marine for US$43.03mil.

However, under the settlement deal, EOL will only pay US$20mil (RM89.5mil) initially for the put-option shares and this will be done after Perisai has satisfied a series of conditions (completion date).

The rest of the consideration — US$23.03mil — will be forked out 15 years after the completion date or when EOL has fully settled its indebtedness, whichever is earlier.

From the US$20mil or RM89.5mil initial proceeds, Perisai said it intended to use most — RM67.13mil — to repay existing borrowings. Perisai’s unit Perisai Capital (L) Inc recently defaulted on S$125mil debt notes due on Oct 3.

It should be noted that one of the conditions precedent imposed on Perisai is that Perisai must give evidence of the binding agreement of its noteholders and financial lenders in respect of the restructuring of the S$125mil notes, and the restructuring of any outstanding indebtedness it owes to any such financial lenders.

Otherwise, if a creditors’ scheme of arrangement is required in relation to Perisai, Perisai must provide EOL with evidence that it has received a High Court order sanctioning a creditors’ scheme of arrangement for the bond restructuring, or the restructuring of any outstanding indebtedness owed to any of its financial lenders. 

EOL, in a Singapore Exchange filing, said it entered into the settlement agreement so that the group could avoid a protracted legal dispute with Perisai which would be time consuming for the management and costly to the group.

“It also seeks to remove market and operational uncertainties which would then allow the group to focus on the business development opportunities such as procuring contracts for the vessel (SJR Marine owns a derrick lay barge which is not currently on contract).

“The commercial terms of the settlement, especially with the deferred payment amount, also significantly reduces the cash upfront vis-a-vis what would have been under the previous terms of the put option,” EOL said.

The granting of the put option was in relation to a conditional share sale agreement (SSA) signed by Perisai and EOL in November 2012 whereby Perisai acquired 51% equity interest in ship and boat leasing firm Emas Victoria (L) Bhd for US$89.25mil and 51% equity interest in ship management services provider Victoria Production Services Sdn Bhd for RM51.

Earlier this month Perisai received a letter from EOL dated Dec 8 notifying EOL’s intention to terminate the SSA following the occurrence of certain events as alleged by EOL. It was not revealed what those “events” were.