Jinqing Cancels Order with Mitsubishi, Asks for Refund
Jinqing Marine Inc. (Jinqing), a wholly-owned subsidiary of Jinhui Shipping and Transportation Limited, has cancelled the contract with Mitsubishi Corporation signed on 14 December 2007 for the acquisition of a deadweight 58,100 metric tons type bulk carrier at a purchase price of JPY4,500,000,000.
Under the terms and conditions of the contract, Mitsubishi has ordered Tsuneishi Holdings Corporation (the ‘Builder’) to build and complete the Vessel in the Philippines, and has agreed to sell and deliver the vessel to Jinqing.
“It is the Company’s firm position that Mitsubishi has failed to procure the Builder to construct the Vessel in compliance with the contractual terms and specifications within the contractual time frame of the Contract,” Jinhui Shipping said in a release.
“In particular, despite repeated requests from Jinqing, Mitsubishi has ignored and further failed to procure the Builder to conduct sea trials as required by the Contract, yet has, notwithstanding, declared the Vessel as ready for delivery.
Accordingly, on 10 September 2013, Jinqing asserted that it was exercising its right to cancel the Contract. In such circumstances, it is the Company’s position and belief that Mitsubishi is obliged under the Contract to refund to Jinqing, inter alia, pre- delivery installments of approximately US$23 million at the current exchange rate made by Jinqing prior to delivery, along with the value of items supplied by Jinqing, together with interest at a rate of 4% per annum and damages within the time frame stipulated under the Contract, ” the release further read.
According to Jinhui Shipping, Mitsubishi has failed to refund any sums to Jinqing or its owner and has disputed the obligation to do so.
“Jinqing will engage all legal means to secure the Company’s and Jinqing’s rights and benefits under the Contract and pursue Mitsubishi to refund all sums to Jinqing or the Company accordingly,” the company added.
The company leaders believe that the Group will not be greatly affected by the cancellation. Prior to the cancellation, the carrying amount of the Vessel under construction recorded in the financial statements of Jinqing was approximately US$17.3 million, being the prevailing direct costs of approximately US$26 million capitalized, net of an impairment loss of approximately US$8.7 million.
Press Release, September 19, 2013