SGX slaps Swiber for breach of listing rules

It involves a $990m project in Western Africa.

Singapore Exchange (SGX) reprimands Swiber Holdings Limited (Swiber) for  failing to provide a 'balanced and fair announcement' in relation to a US$710 million ($990m) project award.

The relevant listing rule requires a company’s announcement to be balanced and fair, and to avoid, among other things, presentation of favourable possibilities as certain, or as more probable than is actually the case.

Here's more from SGX:

On 15 December 2014, Swiber made an announcement entitled, “Swiber Breaks Into the West African Market with US$710 Million Field Development Award”.

The Announcement stated that Swiber had secured a US$710 million project award from a Houston-based oil and gas company to provide Engineering, Procurement, Construction, Installation and Commissioning (EPCIC) services for an offshore field development project.

Swiber disclosed that it would commence work on the Project from the first quarter of 2015 and completion was expected to take place in the middle of 2017.

In the same announcement, Swiber disclosed that for the year-to-date as of 15 December 2014, it had clinched contracts totalling US$1.03 billion.

On 8 July 2016, Swiber announced that the Project has not been able to progress in accordance with its original schedule and that Swiber and its subsidiaries have not recognised any revenue from the Project.

In response to the Exchange’s queries, Swiber provided a copy of the Letter of Intent (LOI) signed between Swiber Offshore Construction Pte Ltd and the Client.

The LOI states that a contract document would be signed subsequent to the completion of the Pre-FEED and FEED study. The initial estimated contract price of US$710 million would be reviewed and the final price determined after the conclusion of the FEED study and on finalisation of the field development plan.

SGX is of the view that the Announcement is not balanced and fair as Swiber presented favourable possibilities as certain, or as more probable than is actually the case.

The Announcement failed to disclose the material conditions that are pre-requisites to the progress of the Project and recognition of revenue by Swiber.

In particular, Swiber did not disclose that based on the LOI, the Project is subjected to the formalisation of a contract in due course between SOC and the Client and the determination of the final contract price.

The announced award amount of US$710 million was only an estimate, based on an initial indicative assessment of the required scope of work, and is subject to review after the conclusion of the FEED study and on finalisation of the field development plan.

Swiber also did not state that it was authorised by the Client to spend only up to US$2 million on the initial Project works until the final contract value was established after the FEED study.

Investors, including shareholders and bondholders, were not made aware that recognition of revenue from the Project would be dependent on completion of the FEED study and determination of the final contract value.

SGX is of the view that the Announcement failed to provide investors, including shareholders and bondholders, with sufficient information to enable them to have a proper understanding of the impact of a major project award on the Group.