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March 10, 2009

OSV orders canceled as Karmsund goes bankrupt

Norwegian shipyard Karmsund Maritime Services (KMS) is to petition for bankruptcy.

That has led to the cancellation of the contracts for two anchor handlers for Solstad Offshore ASA (SOFF) and comes within days of the cancelation of the orders for two deep water multifunctional vessels for Lewek Shipping Pte Ltd, a wholly owned subsidiary company of Singapore's Ezra Holdings.

In a statement issued today, Solstad said that KMS had incurred significant cost overruns and considerable delays on the anchor handler projects. It had informed the banks and Solstad that it was not in a position to stand by its contractual obligations.

Solstad said negotations had taken place to try to find a way to complete the vessels, but without reaching an agreement on how to distribute the cost overrun.

Solstad said the shipbuilding contracts are no longer considered binding agreements and it will claim all deposits under the refund guarantees.

Ezra Holdings Limited announced last week that KMS had informed Lewek that it would not be able to complete and deliver its two vessels under the terms the contracts.

Ezra said that Lewek was canceling the contracts. It said that under the terms of the contracts, Lewek is entitled to a refund of the advance payments made to KMS, totalling NOK 186 million. Lewek is now in the midst of demanding the repayment of NOK 186 million from the bank who provided refund guarantees in respect of the contracts.


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