China Ocean Industry Group finds buyer for two ships

Hong Kong-listed shipbuilding company China Ocean Industry Group has found a potential buyer for two of the six ships, the delivery of which had been delayed.

The company said that a new customer, which remained unnamed, had been found, and that the new buyer will take over the ships and continue with their construction. The acquisition agreements are expected to be finalized in the first quarter of 2019, as long as all the legal preconditions are met, which include rescinding of the original shipbuilding contracts.

With respect to the remaining four ships, China Ocean Industry Group has entered into the framework agreement with Yangzi Xinfu Shipbuilding for the acquisition, construction and onward transfer of one of the four ships in question. Under the terms of the deal, the vessel will be put on sale on an as-is basis by way of public auction with a starting price of USD 8 million.

Yangzi Xinfu Shipbuilding, an indirect subsidiary of Yangzijiang Shipbuilding, agreed to bid USD 8 million for the vessel. Should the bid price exceed USD 8 million, Yangzi Xinfu Shipbuilding would not be obliged to place any additional bids.

The decision was announced following London Maritime Arbitrators Association’s ruling against the company in an arbitration proceeding in relation to the construction of the four ships. The association ordered the shipbuilder to refund over USD 112 million to an unnamed customer.

With regard to the remaining three vessels, the shipbuilder said it was actively negotiating with prospective purchasers adding that it would strive to enter into the relevant acquisition contracts as soon as possible.

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