TAS Offshore to lose RM70m for contract cancellation

TAS Offshore to lose RM70m for contract cancellation
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KUALA LUMPUR (July 21): TAS Offshore Bhd is expected to lose RM70 million for cancelling two contracts with two shipbuilders in China to build 16 units of offshore support vessels (OSVs).

In a bourse filing today, TAS Offshore said its wholly-owned subsidiary TA Ventures (L) Ltd earlier entered into the shipbuilding contracts with Guangzhou Hangtong Shipbuilding and Shipping Co Ltd as well as Jiangmen Hangtong Shipbuilding Co Ltd for the 16 vessels. However, TA Ventures subsequently signed the supplementary agreements and addendums with the shipbuilders to postpone the delivery dates and suspend the shipbuilding progress due to low oil prices and subdued demand for OSVs.

The contract sum for each vessel ranged from US$10.38 million (RM44.24 million) to US$39.38 million per vessel, depending on the size and specification of the vessel. The shipbuilding contracts were executed during 2013 to 2015, with the OSVs scheduled to be delivered between 2014 and 2017.

"There will be no impact on operations of the group arising from the termination of the agreements," it said.

TAS Offshore shares closed unchanged at 20.5 sen today, with 472,800 shares traded. Its market capitalisation stood at RM36.9 million.