Ezion sheds more light on legal spat with Atlantic Marine

First hearing will be in early June.

Ezion’s legal dispute with its former joint venture partner Atlantic Marine Services (AMS) has caused its share price to tumble in recent days.

After issuing a clarification statement, DBS Vickers analyst Ho Pei Hwa reported that Ezion hosted an analyst briefing to shed more light on the spat.

In the briefing, Ezion noted that the higher bareboat charter rates were mutually agreed as a form of compensation to Ezion for the cost overruns in converting the three service rigs.

Ezion also stated that AMS’s 50% stake in one of the three units has also been taken over by Ezion after AMS failed to meet its financial obligations on the cost overrun as per agreement.

Ezion said that AMS was granted the options to acquire a 50% stake in each of the two other rigs at a strike price of US$50k and US$3m respectively, after performing 2.5-3.0 years of the charters.

However, AMS’s inability to pay the incremental capex has breached one of the conditions and led to the lapse of the call options.

The first hearing will be held in early June, where Ezion will file its response to refute the allegations.

“It remains to be seen if Maersk has terminated the service contracts with AMS as the rigs are still in operation. While Ezion has the capability to take over and operate the rigs, these would add to its woes of managing project execution and delivery schedules,” stated the report.