Notice of Termination of Ropax Contract

Singapore, 19 March 2011 - ST Marine, the marine arm of ST Engineering, has received a notice of termination dated 17 March 2011 (Notice) from Louis Dreyfus Armateurs (LDA) in respect of the shipbuilding contract for the Roll-on/Roll-off Passenger ferry (Ropax) contracted in July 2007 for a contract price (inclusive of variable options) of approximately S$179m. In the Notice, LDA have alleged that there is a delay in the delivery of the Ropax vessel. They further allege that even if the vessel is tendered for delivery there will be deficiency in the deadweight capacity of the Ropax vessel.

The Notice further states that in the event LDA is not entitled to terminate the contract in accordance with the Notice, LDA is fully prepared to continue to fulfill its obligations under the contract but however that it will become entitled in due course to terminate the contract by reason of deficiency in the deadweight capacity.

ST Marine has referred the matter to its legal advisers.

In the event the Notice is valid, ST Marine is required to refund the milestone payments made to ST Marine amounting approximately to S$129m plus interest. LDA has also reserved its right to pursue claims in damages. If liable for damages, ST Marine's position is that under the terms of the contract its total liability for damages is capped at 10% of the contract price.

In the circumstances, the termination of the contract is not expected to have any material impact on the consolidated net tangible assets per share and earnings per share of ST Engineering for the current financial year.

ST Marine (Singapore Technologies Marine Ltd), the marine arm of ST Engineering, provides turnkey building, repair and conversion services for a wide spectrum of naval and commercial vessels. In shipbuilding, it has the proven capabilities to provide turnkey solutions from concept definition to detailed design, construction, on-board system installation and integration, testing, commissioning to through-life support. It has also established a track record in providing high engineering content shiprepair and ship conversion services for a worldwide clientele. ST Marine also provides a suite of sustainable environmental engineering solutions via its environmental engineering subsidiaries led by STSE Engineering Services Pte Ltd (STSE). Please visit www.stengg.com.

ST Engineering (Singapore Technologies Engineering Ltd) is an integrated engineering group providing solutions and services in the aerospace, electronics, land systems and marine sectors. Headquartered in Singapore, the Group reported revenues of $5.98b in FY2010 and ranks among the largest companies listed on the Singapore Exchange. ST Engineering has more than 20,000 employees worldwide, and over 100 subsidiaries and associated companies in 24 countries and 45 cities. Please visit www.stengg.com.

Singapore Technologies Engineering Ltd. press release