Singapore-based bulker player Pioneer Marine has terminated five handysize newbuild contracts at Yangzhou Guoyu Shipyard. The instalments paid in relation with these contracts including interest will be paid back by the refund guarantor. Two other ships ordered at the yard have been delayed.
The company’s CEO, Pankaj Khanna, commented: “The unprecedented downturn in dry bulk freight rates has prompted us to cancel another five of our newbuilding contracts at Guoyu Shipyard. This cancellation was achieved amicably through mutual consent in a negotiated settlement with the shipyard.”
The cancellation frees up $30m in cash immediately, to add to the company’s existing cash balance of $57m as of the end of February 2016. In addition it has $24m in pre-paid instalments for the last two newbuildings.
“We have proactively created a long runway for the company even assuming todays very low freight rates, reduced our capital expenditure commitments and have worked in the last few months to trim our costs significantly. Post the cancellation we now have 15 vessels on the water and only two newbuildings, which have been financed with 60% debt with Sinosure cover. Pioneer is now in a strong position to take advantage of the distress in the dry bulk market either from direct asset purchases, bank deals or a M&A transaction,” Khanna said.
