Icon Offshore Bhd and its partner FOB Swath Malaysia A/S have agreed to terminate their shipbuilding contract with Denmark-based Danish Yachts AS.
Icon-FOB Holdings (L) Inc in which Icon Offshore holds a 51% stake while FOB Swath Malaysia owns 49%, terminated the contract with Danish Yachts to build a fast crew boat due to the latter's failure to construct the vessel in accordance with the technical specification.
"Both (Icon-FOB Holdings) and Danish Yachts have agreed to mutually terminate the contract and make full refund of the payment made to date," the company said in a statement.
As a result of the shipbuilding contract being cancelled, IFSB intends to terminate the joint venture.
Under the terms of the letter of termination, Danish Yachts was to refund all payments disbursed to date by Icon-FOB of about RM13.66 million by Oct 8, 2015.
In a press statement, Icon deputy chief executive officer Captain Hassan Ali said: “Compliance to technical specification is a key factor before a vessel is accepted for delivery. Generally, a vessel goes through a stringent harbour acceptance tests and sea acceptance tests before a buyer or owner can accept constructed vessel by any shipyard.
“We will not accept any vessel that does not meet the contractual technical specifications.”
He said Icon, which currently has four other vessels under its shipbuilding programme, would continue to rigorously review the progress of the shipbuilding contract, especially technical specification compliance.
"The termination of the shipbuilding contract is not expected to have any impact on Icon Offshore's gearings, earnings, net assets, share capital and shareholding structure of Icon Offshore," said the group.