SINGAPORE (Nov 19): OCBC Investment is maintaining its “sell” call on Sembcorp Marine with $2.00 fair value after a customer finds faults with a new rig and cancels its contract.

Marco Polo Drilling (I) issued SembMarine’s subsidiary PPL Shipyard a notice of termination of a jack-up rig construction contract, following PPL’s alleged failure to comply with certain material contractual obligations.

Marco Polo Drilling says cracks have been found on all three legs of the new rig during two rounds of tests. As such, it will not be taking delivery of the rig and will be seeking, among others, a refund of the initial amount of 10% of the contract price or US$21.4 million ($30.4 million) together with interest.

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