Euroseas, bulker and container vessels owner and operator, said it has terminated a contract on the construction of a ultramax vessel at Sinopacific Shipbuilding’s Dayang shipyard.
The ultramax vessel was originally scheduled for delivery in the second quarter, but faced excessive construction delays. The Sinopacific Dayang shipyard has seen its cashflow dried up leading to unpaid wages and stalled operations amid the severe shipbuilding industry downturn.
“The company has demanded the return of its progress payments and other expenses as specified in the newbuilding contract and secured by refund guarantees. The parties have referred the matter to arbitration,” Euroseas stated.
Euroseas added it has a second newbuilding contract for a similar ultramax vessel with the same Chinese yard which is also facing significant delays.
Separately, the shipowner has changed a firm shipbuilding contract for a kamsarmax vessel into an option at another Chinese yard Yangzijiang Shipbuilding. The newbuilding, yet to be built, is originally scheduled for delivery in the second quarter of 2018.
Euroseas has now acquired the option from Yangzijiang to decide whether to continue with building the kamsarmax, or build a different type of vessel, or credit the payment already made as part of the original contract ($2.77m) to acquire a different vessel from the yard, or decide to cancel the shipbuilding contract without any additional cost. Euroseas has until 31 December 2016 to decide.
Euroseas has taken delivery of a similar kamsarmax vessel, Xenia, in February this year.
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