DECEMBER 31, 2013 — St. Catharines, Ontario, headquartered Algoma Central Corporation says that it has received payments totaling $41.7 million from two Chinese banks on refund guarantees related to the cancelation of three ocean tanker shipbuilding contracts.
"We are extremely pleased to announce the collection of these outstanding instalment refunds," said Greg Wight, President and CEO of Algoma. "The collection process has proceeded smoothly following an arduous arbitration and appeal process that extended over three years from the date we canceled the contracts. We would like to formally thank the banks for their actions in closing these files."
In 2007, Algoma, through its wholly owned subsidiary Algoma Tankers International Inc., entered into contracts with Jiangxi Jiangzhou Union Shipbuilding Co. Ltd to build three 16,500 dwt product tankers in China. Each contract contained provisions that permitted cancelation under certain conditions. These conditions were met in 2010 and Algoma accordingly issued notices of rescission to the shipyard seeking to cancel the contracts and demanding reimbursement of the installments that had been advanced. The matter was taken to arbitration by the shipyard and hearings were conducted before a Tribunal in London in September, 2012. The Arbitration Tribunal found in favor of Algoma in all matters in April, 2013 and the shipyard sought leave to appeal. The U.K. commercial courts rejected the shipyard's application in November and Algoma commenced collection action immediately thereafter.