SembMarine wins control of PPL Shipyard's board

SINGAPORE - Rigbuilder Sembcorp Marine has gained complete control of the board of its subsidiary, PPL Shipyard, following a ruling by the Court of Appeal yesterday.

The judgment ends what has been a lengthy legal battle between SembMarine and PPL Holdings.

Both firms had started PPL Shipyard as a joint venture in 2001 in order to capture more of the oil-rig market.

Each had equal shareholder rights. However, the partnership venture soon turned sour.

In 2003, SembMarine raised its stake in PPL Shipyard to 85 per cent but the voting rights between the two shareholders remained equal.

The Court of Appeal hearing came about after the High Court dismissed a suit from SembMarine last year. The suit was triggered after listed Baker Technology sold PPL Holdings - which has a 15 per cent stake in PPL Shipyard - to a consortium that included Chinese firm Yangzijiang Shipbuilding three years ago.

SembMarine had argued in the High Court case that it had the right of first refusal to that stake, given its position in the joint venture.

It lost that judgment but appealed on two main elements.

SembMarine said that since equity in the shipyard was no longer held equally, there should no longer be equal voting rights.

The Court of Appeal judgment yesterday ruled that certain provisions in the joint-venture agreement that were premised on SembMarine and PPL Holdings having equal shareholding no longer applied once SembMarine increased its stake from 50 per cent to 85 per cent in PPL Shipyard.

Essentially, this means it should have more voting rights because it now has more shares.

But the court did not agree that SembMarine had the right to terminate the joint-venture agreement.

It also made rulings regarding the board composition of PPL Shipyard.

PPL Holdings had cross-appealed that it had the right to appoint the managing director of PPL Shipyard. This was dismissed by the court, according to SembMarine's statement last night.

The court also ruled that certain resolutions passed by PPL Shipyard directors nominated by SembMarine were valid and not in breach of the provisions in the joint-venture agreement.

The removal by these directors of Mr Anthony Aurol as a director of PPL Shipyard was also upheld.

"Sembcorp Marine is pleased with the outcome," it said in its statement.

"Sembcorp Marine will have complete control of the PPL Shipyard board. PPL Holdings also lost the right under the joint-venture agreement to appoint its nominees to PPL Shipyard's board."

SembMarine said it will also have the right to appoint PPL Shipyard's chairman, deputy chairman, managing director and deputy managing director.

It continues to hold 85 per cent of PPL Shipyard.

While PPL Holdings gets to keep its 15 per cent stake, the judgment means that it is now a mere minority owner and has very little say on how PPL Shipyard is run.

jonkwok@sph.com.sg

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