RigNet, a global provider of communications solutions for the offshore oil and gas industry, has agreed to pay $50,75 million to resolve a dispute with satellite telecommunication firm Inmarsat.
RigNet on Monday said it had reached a settlement with Inmarsat Global Limited (“Inmarsat”) that concluded the GX Arbitration pending before the International Centre for Dispute Resolution.
Inmarsat had filed the arbitration with the International Centre for Dispute Resolution in October 2016 concerning a January 2014 take or pay agreement to purchase up to $65.0 million, under certain conditions, of GX capacity from Inmarsat over several years.
According to RigNet, Phase I of the arbitration concerned only whether RigNet’s take or pay obligation ever started under the agreement and resulted in an interim award to Inmarsat of $50.8 million. Phase II of the arbitration was to address RigNet’s counterclaims against Inmarsat on a variety of subjects, as well as Inmarsat’s additional claims and for interest and attorneys’ fees.
Under the settlement announced on Monday, RigNet will pay Inmarsat $45 million immediately, $5 million in the third quarter of 2019, and $750,000 in the third quarter of 2020.
Steven Pickett , RigNet Chief Executive Officer and President said: “We are glad to put this matter behind us. While we are disappointed in the panel’s Phase I findings that a take or pay obligation under our January 2014 agreement had commenced, we believe that settling this matter reduces risk for our shareholders, customers, and employees. We were able avoid additional costs related to the arbitration and to secure value for our counterclaims which offsets Inmarsat’s additional claims, as well as their claims for interest and attorneys’ fees.”
“Now we can return 100% of our focus to our ongoing business operations as we continue to deliver best-in-class managed communications, real-time machine learning, and cybersecurity solutions to our global customers.”
RigNet recorded a non-cash litigation reserve in the fourth quarter of 2018 of $50.6 million, net of approximately $0.2 million of prior accruals. RigNet doesn’t expect any impact on second quarter 2019 earnings as a result of the settlement.
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