Algoma Collects Refund Guarantees from Four Cancellations
- Business & Finance
The Canadian shipping company Algoma Central Corporation has collected USD 29.1 million being the final refund guarantee related to the cancellation of the four shipbuilding contracts with China’s shipbuilder Nantong Mingde Heavy Industries Co. Ltd.
“The collection of this final refund guarantee brings to an end the extended process related to the cancellation of the four Mingde shipbuilding contracts,” said Peter Winkley, Vice-President, Finance and CFO of Algoma.
“These funds, along with amounts previously collected, will be invested in active shipbuilding contracts now underway in Croatia and China,” Winkley added.
Algoma entered into contracts in 2010 to build six Equinox Class dry-bulk carriers in China to replace aging ships in its domestic dry-bulk fleet.
As a result of the bankruptcy of the shipyard, only two of these vessels have been delivered and the company has cancelled the four remaining contracts.
In February 2016, the UK Arbitration Tribunal in London ruled in favour of Algoma Central Corporation with regard to the contract dispute involving the three shipbuilding contracts between Algoma and Nantong Mingde, while the dispute over the fourth shipbuilding contract was resolved in July, when the Tribunal found in favor of the Canadian dry and liquid bulk carrier operator.
The company has now collected full refunds of the related construction installments plus interest.
Algoma entered into new contracts with shipyards in Croatia and in China for the construction of five new full sized Equinox Class vessels, deliveries of which are expected to occur in 2018.
The installments refunded in this action would be used to fund a portion of the costs for the new contracts, Algoma said.