FGH Rejects Petrodrill Contract

Thursday, July 26, 2001
Friede Goldman Halter, Inc., (FGH) announced that the bankruptcy court has officially rejected the Petrodrill contracts. On June 12, FGH filed a motion with the bankruptcy court to reject the two contracts for the construction of the two "Amethyst" offshore drilling rigs for Petrodrill, a Brazilian company. These highly unprofitable contracts caused substantial losses to the Company, and were one of the two key influences in conjunction with the losses suffered on the Ocean Rig Bingo program which led to the Company's decision to file Chapter 11. By virtue of this order, the company's contractual obligations on this project are terminated. Unsuccessful negotiations for the terms of completion of these two unprofitable contracts with Petrodrill and the surety, Fireman's Fund Insurance Company, a wholly owned subsidiary of the German insurance company Allianz, led to the filing of this rejection motion. According to John Alford, president and chief executive officer of FGH, "We are pursuing alternatives with Petrodrill to help them finish these rigs. We are not opposed to alternatives that may be offered which would help them finish this project. Earlier this year, we were successful in reaching an agreement to assist Ocean Rig, ASA in the completion of their rigs."

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