Eitzen cancels newbuilding orders

Oslo-based Camillo Eitzen & CO ASA has reached an agreement with a Japanese shipyard for the cancellation of the six 2,500m3 gas carriers against a final and total settlement of $2.5 million. The existing newbuilding commitment on the gas vessels implies a reduction in newbuilding commitments of about $105 million for Eitzen Gas. As a result of the cancellation, Eitzen Gas has no newbuilding commitments.

In addition, Eitzen Chemical ASA reports that it has agreed with the same Japanese yard for the cancellation of five 12,000 DWT stainless steel chemical tankers with a remaining capital expenditure of $175 million. The company will compensate the yard by releasing a deposit of $7.5 million and it will pay a further cancellation fee of $7.5 million before 30 November 2009. The agreement is conditional upon Eitzen Chemical providing a satisfactory security to the yard for the cancellation fee.

Both agreements are positive, in as much as the risk associated with the long term financing of the respective vessel orders have been eliminated. The company took delivery of the 25,000 DWT ‘Sichem Osprey’ coated IMO II, from Dae Sun in Korea on 7 April 2009, which concludes the newbuilding program in Korea.

Both Camillo Eitzen & Co ASA and Eitzen Chemical ASA are presently in discussion with its lenders, with the aim to amend the debt repayment schedule and to adjust the covenant structure, to better fit today’s market environment.