July 19 - Whilst the battle for ownership of Fairstar Heavy Transport was effectively concluded earlier this week, the intrigue surrounding Dockwise's hostile takeover goes.
Earlier today, an identical press release issued by both companies, confirmed that on May 3, 2011, after news broke of Dockwise's offer, Fairstar entered into a shipbuilding contract with a face value of USD110 million with China Shipbuilding Trading Company Limited (CSTC) and Guangzhou Shipyard International Company Limited(GSI) concerning the acquisition and building of a fifth vessel (Fathom), identical to the two earlier newbuilds Forteand Finesse .
In an earlier statement on July 12 about a proposed USD335 million private placement of debt securities, Fairstarsaid that it had announced its plans to build the 48,000 dwt semi-submersible vessel on April 20, 2012, with delivery expected in 2013.
The latest press release reported that this contract was amended by a Memorandum of Agreement to the Shipbuilding Contract on May 23, obliging Fairstar to payment the first and second Instalments under the shipbuilding contract by June 20, with any failure to do so representing a default, entitling CSTC and GSI to terminate the contract.
Such a termination, said the press release, would oblige Fairstar to pay a termination fee in the amount of USD37.5 million, and forfeit the USD2 million down payment already paid pursuant to the shipbuilding contract.
HLPFI understands that Fairstair failed to pay the sums by the due date, although the Dockwise / Fairstar press releases suggest that that there has been no indication the shipbuilding contract has been terminated.
Fairstar and CSTC and GSI have agreed to meet with Fairstar management shortly and discuss the present situation.