Greek buyer cancels four ship orders from Rongsheng

PUBLISHED : Thursday, 04 September, 2014, 6:37pm
UPDATED : Thursday, 04 September, 2014, 6:37pm

Embattled shipbuilder China Rongsheng Heavy Industries has suffered fresh order cancellations valued at more than US$102 million from a European customer after reporting deep losses and order cancellations for the first half of this year.

Athens-based, Nasdaq-listed DryShips said on Wednesday that it had reached an agreement with Jiangsu Rongsheng Heavy Industries, the main subsidiary of China Rongsheng, to cancel four ice-class Panamax dry-bulk vessels in exchange for the refund of all instalments paid to the builder plus interest, which are valued at more than US$11.6 million.

The four vessels were ordered between December 2011 and February 2012 at US$34 million apiece, or US$102 million in total, according to Clarksons Research. They were scheduled for delivery between this month and April next year.

In November, DryShips chairman George Economou told investors at its earnings conference that he did not expect Rongsheng to deliver on time the four vessels, each with a capacity of 75,750 deadweight tonnes.

Rongsheng reported that its first-half net loss more than doubled from a year ago to 3 billion yuan (HK$3.78 billion), of which 1.2 billion yuan was for refunded down payments, interest and penalties resulting from order cancellations.

Trading in Rongsheng’s shares has been halted since Friday, pending the release of information on its restructuring.