Fairstar Heavy confirms commitment to newbuilding contract

JULY 19, 2012 — Even though it failed to make a payment due on June 20, 2012, Fairstar Heavy Transport N.V., says there is “no indication” that a newbuilding contract it entered into on May 3, 2011 has been canceled. Signed with China Shipbuilding Trading Company Limited (CSTC) and Guangzhou Shipyard International Company Limited (GSI) the $110 million contract covers the acquisition and building of a fifth semi-submersible heavy transport vessel (MV Fathom), identical to two earlier newbuilds MV Forte (pictured here undergoing submergence test) and MV Finesse.

Under a Memorandum of Agreement signed  May 23, 2012, Fairstar was obliged to make payment of the first and second instalments under the Shipbuilding Contract by June 2,2012. Failure to do so would constitute an event of default and entitle CSTC and GSI to terminate the shipbuilding contract, with Fairstar having to pay a $37.5 million termination fee and forfeit the $2 million down payment it has already paid.

Today, Fairstar — which is in process of being acquired by Dockwise —reported that CSTC and GSI have agreed to meet with Fairstar management shortly and discuss the present situation.

Meanwhile, Fairstar and Dockwise are looking at scenarios, involving amongst others the earlier announced intended conversion of the Dockwise Black Marlin which, when viewed from a combined fleet perspective, will allow for optimization in CAPEX commitments and CAPEX planning without a need for additional equity for the foreseeable future.