State-run Oil and Natural Gas Corporation (ONGC) and a local unit of Singapore’s Swiber Holdings Ltd have agreed to settle a dispute regarding a bank guarantee given by the oilfield services firm to India’s biggest explorer.
The dispute arose in August when ONGC sought to invoke four performance bank guarantees totaling $105 million (around Rs 700 crore) fearing that Swiber Holdings, which had earlier filed for liquidation in a Singapore court, may not be able to finish work on three of its projects.
Subsequently, Swiber approached the Bombay High Court to stop ONGC from invoking the guarantee.
On Thursday, ONGC and Swiber Offshore India filed consent terms in the court of Justice SJ Kathawalla to settle the dispute. As per the terms, the four bank guarantees will be kept with a designated bank account of ONGC and the money will be used to complete the three projects.
Nishith Dhruva, managing partner at law firm MDP Partners, which is representing ONGC in the matter, and Raj Panchmatia, partner at Khaitan & Co, which is representing Swiber Offshore India, confirmed the amicable settlement of the matter but declined to comment further.
Earlier, Swiber had approached a Singapore court seeking approval of a judicial manager to restructure the company after a slump in oil prices dragged it into financial troubles. Judicial management is an equivalent of India’s Board for Industrial and Financial Reconstruction, which helps companies to restructure their businesses.
While initiating the invocation process of the bank guarantee, ONGC had earlier argued that it was entitled to get the money since Swiber had filed for judicial management. Swiber Offshore India argued that more than 70% of the work had been completed and that it was in a position to fulfil the work within the deadline. It had also said that if ONGC invoked the bank guarantee it would hurt the company badly. Swiber told the court the size of the contract with ONGC was around $800 million.
Swiber’s trouble started in July when it declared its inability to raise $200 million from London-based private equity firm AMTC Ltd. In August, the company said it defaulted on a S$150 million debt. The company is contemplating multiple ways to raise further capital to stay afloat.
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