Solstad cancels newbuilds after KMS files for bankruptcyNews // March 10, 2009
Solsatd has cancelled two newbuilds it had on order at KMS.
Solstad Offshore has confirmed that it has cancelled two newbuilding contracts at Karmsund Maritime Service (KMS), after the yard announced its bankruptcy earlier today. Solstad said KMS had informed it that it would be submitting a petition for bankruptcy.
Solstad Rederi AS, a 100 per cent owned subsidiary of Solstad Offhsore, has two newbuilding contracts with KMS.
KMS has incurred significant cost overruns and considerable delays under the two projects, and informed involved banks and Solstad that they are not in a position to stand by their contractual obligations.
Said Solstad: "In an attempt to find a model for finalizing the vessels, negotiations between the involved parties have taken place, however without successfully reaching an agreement regarding the distribution of the said cost overrun."
"The present breach of contract and the announcement for petition for bankruptcy means that the shipbuilding contracts are no longer considered as binding agreements. Solstad will, on this basis, claim all deposits under the refund guarantees."
Days earlier, Ezra Holdings Limited also announced that it had been informed by the KMS that KMS will not be able to complete and deliver two vessels it is building for Ezra Holdings' subsidiary Lewek Shipping in accordance with the contracts for the vessels. As a result, Lewek Shipping also cancelled the contracts.