SGX issued a public reprimand to Swiber, which is under judicial management, for failing 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.
When Swiber announced in December 2014 the securing of the $710m project in West Africa, it added the contract value to its orderbook for the year ended 2014, amounting to $1.03bn at that time. Swiber, however, had not signed a formal contract for the West Africa deal.
It was only until 8 July 2016 that Swiber revealed the project has not been able to progress and it has not recognised any revenue from the project.
“In its announcements between 15 December 2014 and 8 July 2016, Swiber had included the value of the $710m project in its orderbook without any qualification that the contract document has yet to be signed, the contract value is only an indicative price that is still subject to review, or that the project has been delayed,” SGX stated.
When queried by SGX, Swiber presented a copy of the Letter of Intent (LOI) signed between its unit Swiber Offshore Construction (SOC) and the client.
The LOI states that the contract document would be signed at a later stage of the project after some relevant studies are completed, and that the estimated contract price of $710m would be reviewed and the final price determined also at a later state.
SGX is of the view that the 15 December 2014 announcement by Swiber is “not balanced and fair” as the company “presented favourable possibilities as certain, or as more probable than is actually the case.”
In particular, SGX said Swiber did not disclose that based on the LOI, the project is subjected to the formalisation of a contract in due course between the two contracting parties. “Swiber also did not state that it was authorised by the client to spend only up to $2m on the initial project until the final contract value was established after the FEED (Front End Engineering Design) study,” SGX said.
“SGX has referred the case to the relevant authorities,” it added.
Copyright © 2024. All rights reserved. Seatrade, a trading name of Informa Markets (UK) Limited. Add Seatrade Maritime News to your Google News feed.
