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Pipavav ships face uncertainty as buyer mulls bankruptcy

Pipavav ships face uncertainty as buyer mulls bankruptcy
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First Published: Fri, Oct 31 2008. 09 51 PM IST
Updated: Fri, Oct 31 2008. 09 51 PM IST
Bangalore: Mumbai-based Pipavav Shipyard Ltd, India’s newest private sector shipbuilder, may find itself grounded with six cargo ships after a buyer announced earlier this week that it might go into liquidation.
London-based Britannia Bulk Holdings Inc., a New York Stock Exchange-listed company, said in a 29 October statement that following a substantial third quarter loss for calendar year 2008, it is considering liquidation or filing for bankruptcy protection, among other alternatives.
Britannia had said in a statement on 8 November 2007 that it would buy six medium-sized dry bulk ships commissioned for building in March 2007 by Bermuda-based Golden Ocean Group Ltd, a dry bulk cargo ship operating firm controlled by Norwegian shipping tycoon John Fredriksen.
Golden Ocean paid $36 million to Pipavav Shipyard to build the ships and $178 million was to be paid on delivery, scheduled for between the second quarter of 2009 and third quarter of 2010. Later, Golden Ocean made a $127 million profit when it sold the ships to Britannia while the ships were being built.
“If Britannia doesn’t take delivery of the ships from Golden Ocean upon construction, that’s an issue between both of them,” Pipavav chief executive Ray Stewart told Mint by phone from Mumbai.
“As far as we are concerned, there is no change in the situation. We have a contract with Golden Ocean who will take delivery of the ships from us upon completion by paying the balance amount of the price agreed at the time,” he said.
Britannia and Golden Ocean could not be reached for comment.
Golden Ocean stands to benefit whether Britannia takes delivery or not, Stewart said. “If Britannia takes delivery of the ships, Golden Ocean would have made handsome profits from the sale. If Britannia doesn’t, then Golden Ocean’s net cost of buying the ships will be greatly reduced because it need not repay the $71 million received from Britannia,” Stewart added.
Golden Ocean asked Pipavav Shipyard to build four Panamax carriers, each with a cargo capacity of 75,000 tonnes, for $35.5 million (Rs156.7 crore then) each, and a so-called optional order for two more, which it exercised on 2 July 2007 at $36 million each. Panamax ships are so named because they are the largest ships that can navigate the Panama Canal with a full load.
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First Published: Fri, Oct 31 2008. 09 51 PM IST