Otto Marine announced on Thursday that the claimants are a holding company and its wholly-owned subsidiary, with which Otto Ventures entered into a term sheet with them in September last year over the two OSVs.
Otto Marine said that the claimants have commenced arbitration proceedings with the Singapore International Arbitration Centre against Otto Ventures where they are claiming losses of approximately $8.88m caused by Otto Ventures’ alleged breach of the term sheet by refusing to cooperate in securing financing for the vessels.
The first procedural meeting of the arbitration was held on 4 May this year.
“The claimants had earlier, contrary to the term sheet which included an arbitration clause, issued a writ of summons against Otto Ventres for the claim as well. Otto Ventures applied successfully to the court for legal proceedings in the suit to be stayed in favour of the arbitration,” Otto Marine said.
Separately, Otto Ventures had also loaned $650,000 to the holding company under a loan agreement dated 3 September 2014.
Under the provision of the loan agreement, the loan is payable by 20 December 2014 should the vessels not be transferred to a joint venture company by then. But the claimant has so far not repaid the loan, Otto Marine claimed.
Otto Ventures subsequently informed the claimants of its intentions to terminate the term sheet as it pointed out that the claimants have failed to ensure the vessels were delivered within the contractually stipulated time and the joint venture company’s failure to obtain financing.
Otto Ventures has demanded repayment of the loan under the loan agreement, according to Otto Marine.
“The company has been advised by its lawyers that the claim is vexatious, the likelihood of the entire amount of claim being successful is low, the claimants cannot justify or meaningfully quantify the full amount of the claim, and the company has more than an even chance of successfully defending the arbitration,” Otto Marine said.
Recently, Otto Marine has fully paid up debts of around $1.18m to an unnamed creditor, and the creditor has withdrawn a winding up application against Otto Marine.
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