Two Norwegian shipping groups cancel 11 vessels
Two Norway-listed shipping groups said on Wednesday they had cancelled plans to build a total of 11 new vessels and were in discussions with lenders to restructure debt.
Eitzen Chemical (ECHEM.OL) said it would cut its shipbuilding programme by $175 million by cancelling five chemical carriers, and Camillo Eitzen (EZN.OL) said it would cancel six gas carriers and cut spending by about $105 million.
The shipping market has been hurt by the global downturn, which has seen freight volumes and rates plunge. There have been numerous vessel cancellations as a large order book has exceeded demand and liquidity problems have built up.
Eitzen Chemical said it would compensate the yard in Japan that was to have built the vessels by releasing a deposit of $7.5 million and paying a further cancellation fee of $7.5 million by Nov. 30.
Camillo Eitzen will pay a final settlement of $2.5 million.
Eitzen Chemical still has three new vessels on order after the cancellations, while Camillo Eitzen has none, the companies said.
Eitzen Holding, 100 percent owned by the Eitzen family, holds 53.7 percent of Camillo Eitzen, which in turn holds 50.05 percent of Eitzen Chemical. Eitzen Gas -- which was to receive the cancelled vessels -- is 100 percent owned by Camillo Eitzen.
Eitzen Chemical said it expected to record a loss of about $10 million from the transactions.
Camillo Eitzen was not available for comment.
"Both Camillo Eitzen & Co ASA and Eitzen Chemical ASA are presently in discussions 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," Camillo Eitzen said in a statement.
"We expect continued challenging market conditions following the financial crisis," Eitzen Chemical Chief Executive Terje Askvig said in a statement. "With this restructuring plan in place, we will be better positioned to meet the challenging market conditions that lie ahead," Askvig said.
Eitzen Chemical told Reuters it has about $700 million in bank debt and it would negotiate to change the terms of its deal with a bank syndicate led by Nordea (NDA.ST). It said its total debt was just above $1 billion, including lease obligations and some bond debt.
CEO Askvig said a share issue was not an option. "We will avoid that as far as we can," he told Reuters.
Shares in Eitzen Chemicals initially rose as much as 5.8 percent and were trading up 4.6 percent at 3.45 crowns by 0942 GMT, against the trend of a falling Oslo bourse .OSEBX.
Shares in Camillo Eitzen remained untraded.
Eitzen Chemical (ECHEM.OL) said it would cut its shipbuilding programme by $175 million by cancelling five chemical carriers, and Camillo Eitzen (EZN.OL) said it would cancel six gas carriers and cut spending by about $105 million.
The shipping market has been hurt by the global downturn, which has seen freight volumes and rates plunge. There have been numerous vessel cancellations as a large order book has exceeded demand and liquidity problems have built up.
Eitzen Chemical said it would compensate the yard in Japan that was to have built the vessels by releasing a deposit of $7.5 million and paying a further cancellation fee of $7.5 million by Nov. 30.
Camillo Eitzen will pay a final settlement of $2.5 million.
Eitzen Chemical still has three new vessels on order after the cancellations, while Camillo Eitzen has none, the companies said.
Eitzen Holding, 100 percent owned by the Eitzen family, holds 53.7 percent of Camillo Eitzen, which in turn holds 50.05 percent of Eitzen Chemical. Eitzen Gas -- which was to receive the cancelled vessels -- is 100 percent owned by Camillo Eitzen.
Eitzen Chemical said it expected to record a loss of about $10 million from the transactions.
Camillo Eitzen was not available for comment.
"Both Camillo Eitzen & Co ASA and Eitzen Chemical ASA are presently in discussions 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," Camillo Eitzen said in a statement.
"We expect continued challenging market conditions following the financial crisis," Eitzen Chemical Chief Executive Terje Askvig said in a statement. "With this restructuring plan in place, we will be better positioned to meet the challenging market conditions that lie ahead," Askvig said.
Eitzen Chemical told Reuters it has about $700 million in bank debt and it would negotiate to change the terms of its deal with a bank syndicate led by Nordea (NDA.ST). It said its total debt was just above $1 billion, including lease obligations and some bond debt.
CEO Askvig said a share issue was not an option. "We will avoid that as far as we can," he told Reuters.
Shares in Eitzen Chemicals initially rose as much as 5.8 percent and were trading up 4.6 percent at 3.45 crowns by 0942 GMT, against the trend of a falling Oslo bourse .OSEBX.
Shares in Camillo Eitzen remained untraded.