The perfect storm: Is another contract cancellation wave threatening to hit SembMarine?

Its agreement with NAD is currently at a standstill.

Fresh from its contract tussle with Marco Polo, it seems like the waves just won’t stop buffeting Sembmarine as things are looking turbulent with its West Rigel agreement with NAD.

According to analysts from UOB Kay Hian, it appears NAD is unable to finance the final payment to finance the final payment since banks are likely to lend without a charter contract.

Meanwhile, UOB Kay Hian says SMM wishes to collect the remaining payment, leading the firm to reverse recognised profit in its 4Q15 financials on prudent accounting.

While a profit reversal remains possible, UOB Kay Hian says the standstill agreement points to neither a cancellation or delivery deferral.

“It is clear that both parties are trying to settle with a win-win solution,” UOB Kay Hian said.

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