KHI announces extraordinary losses due to ISLAND NAVIGATOR contract termination

Kawasaki Heavy Industries, Ltd. (“KHI") has decided at its Board of Directors meeting held December 27, 2017, to terminate by agreement its shipbuilding contract for the top hole drilling/light well intervention vessel, “ISLAND NAVIGATOR”. This contract was concluded with a subsidiary of Island Offshore Shipholding LP (“Island Offshore”), a major Norwegian operator of offshore service vessels, the Company said in a media release.

As a consequence of this, KHI hereby announces that KHI will declare extraordinary losses in the consolidated settlement of accounts for the third quarter of the fiscal year ending 31 March, 2018. 1. Background on the extraordinary losses With the intention of entering into the offshore development industry expected to be a potential market in mid- and long-term, KHI signed a shipbuilding contract for a top hole drilling/light well intervention vessel (hereinafter “Vessel”) with a subsidiary company of Island Offshore in November 2013. Since the Vessel was the first vessel of this type to be constructed by KHI, it had been facing difficulties in its engineering process as well as increases in the material costs etc.