Sembcorp Marine Says Refused to Be ‘Blackmailed’ Over PPL Stake
Sembcorp Marine Ltd. said it refused to be “blackmailed” into offering a higher price than earlier agreed for the remaining 15 percent of PPL Shipyard it didn’t already own, Sembcorp’s lawyer said at a trial in Singapore.
“This is a tale of how the temptation of lucre was allowed to erase a promise to engage in fair dealing,” Davinder Singh, representing Sembcorp, said at the start of the proceedings at the Singapore High Court today.
Sembcorp, the world’s second-biggest builder of oil rigs, sued PPL Holdings Pte in May 2010 for refusing to accept a S$59.4 million ($49 million) offer for the 15 percent stake. Sembcorp claimed it had the right to buy the stake before Chinese rival Yangzijiang Shipbuilding (Holdings) Ltd., which agreed to acquire PPL Holdings.
Yangzijiang competes with Sembcorp in rig construction. Oil companies, including Royal Dutch Shell Plc and Petroleo Brasileiro SA, plan to spend billions of dollars for floating drilling units as they move into unchartered areas.
PPL Holdings had promised to sell its stake in PPL Shipyard to Sembcorp at an agreed price but failed to do so, according to the lawsuit. Instead, PPL Holdings went to a competitor and passed on confidential information so they could secure a higher price than what had been agreed with Sembcorp, Singh said.
Baker Technology Ltd. (BTL) agreed to sell its unit PPL Holdings to a group led by Yangzijiang, which operates yards in China’s Jiangsu province, for $155 million in April 2010. The amount was later cut to $116.3 million. The sale included the 15 percent stake in PPL Shipyard.
PPL Holdings then went to Sembcorp for a matching offer, Singh said. Singapore-based Sembcorp claimed a breach of contract.
“This action chronicles Sembcorp Marine’s contrived and unmeritorious attempts to unilaterally rewrite its rights and obligations,” according to opening remarks by PPL Holdings’ lawyers Kenneth Tan and N. Sreenivasan. “Sembcorp Marine did its utmost to scuttle” the sale, including trying to scare away Yangzijiang, the lawyers said.
Baker, a Singapore-based maker of equipment for the oil and gas industry, has called Sembcorp’s allegations of a breach “baseless.”
The case is Sembcorp Marine Ltd. (SMM) v PPL Holdings Pte S351/2010 in the Singapore High Court.