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Precious Shipping loses China yard arbitration over excessive fuel consumption on newbuilds

Precious Shipping loses China yard arbitration over excessive fuel consumption on newbuilds
Precious Shipping has lost an arbitration over excessive fuel consumption on ultramax bulkers built at Taizhou Sanfu Ship Engineering in China.

“The arbitration process with Sanfu on the excessive fuel consumption issue has been completed with the Tribunal’s ruling going against us,” Precious Shipping said in its third quarter results.

The Bangkok-headquartered dry bulk shipowner ordered 10 ultramaxes from Taizhou Sanfu three of which were later cancelled. The shipyard made unsecured loans to the shipowner on the other newbuilding dependent on arbitrations on the first two newbuildings over an excessive fuel consumption.

“As a result, we will have to repay the $32m unsecured corporate loans that Sanfu had given us,” Precious Shipping. The shipowner has to make the payment plus interest of 6% pa to Taizhou Sanfu by 4 October 2018. It also has to pay legal fees capped at $750,000.

Precious Shipping said its P&L would only be impacted by the interest and legal fees payments.

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