Court Orders Swiber to Stop Payment of Bank Guarantees

Swiber Offshore Construction, part of troubled Singapore oilfield services firm Swiber Holdings, has received an interim court order to halt payment of bank guarantees for projects it was involved in, a stock exchange filing showed.

 

Parent company Swiber Holdings last month applied to place itself under judicial management, after initially filing for liquidation, becoming the largest local company to fall victim to the slump in oil prices. Judicial management allows for a company to be nursed back to health under the supervision of the Singapore Court.

 

Calling on the bank guarantees could further lower confidence in the company when the market is looking for signs of whether it has sufficient liquidity to survive the crisis.

 

India's state-run Oil and Natural Gas Corp Ltd called on five bank guarantees of about $94.48 million and two others of about 644.2 million rupees ($9.7 million), of which one was paid out by the bank concerned, Swiber's interim judicial managers said in a statement on Monday.

 

The guarantee had a value of around $4.6 million and the bank involved was not named.

 

Indian engineering and construction firm Punj Lloyd Ltd called on a $1.475 million bank guarantee provided for two projects, which has been paid out by the bank, the statement said.

 

Swiber Offshore Construction notified both ONGC and Punj Lloyd that their calls were made wrongfully and filed several petitions for injunctions against the payment of the bank guarantees.

 

It obtained an interim court order on Aug. 4 instructing the banks to hold back on any payment of the bank guarantees until the next hearing date for the applications for injunctions, presently fixed for Aug. 11.

 

In addition, Swiber Holdings and its subsidiaries have also received a total of $99 million worth of claims as of Aug. 4, the filing showed. The company is taking legal advice on the claims, it said.