Euroseas Ltd. (NASDAQ: ESEA), an owner and operator of drybulk and container carrier vessels and provider of seaborne transportation for drybulk and containerized cargoes, announced yesterday that its Ultramax drybulk vessel, Hull Number DY 161, under construction at Dayang yard and previously scheduled for delivery at the end of August 2016, was cancelled due to excessive construction delays.
The Company has demanded the return of its progress payments and other expenses as specified in the newbuilding contract and secured by refund guarantees. The parties have referred the matter to arbitration. In June 2016, the Company cancelled another newbuilding contract for a similar Ultramax vessel, Hull Number DY 160, with the same yard also due to excessive construction delays.
Image courtesy: Euroseas
Furthermore, as previously announced regarding the Company's remaining newbuilding contract with YJZ yard for the construction of Kamsarmax vessel, Hull Number YZJ 1153, scheduled to be delivered during the first quarter of 2018, the Company has acquired the option until December 31, 2016 to decide whether to build the vessel, or build a vessel of different type, or credit the payment already made as part of the original contract ($2.77m) to acquire a different vessel from the yard at a mutually agreed price, or decide to cancel the shipbuilding contract without any additional cost.
Aristides Pittas, Chairman and CEO of Euroseas, commented: "After the cancellation of our newbuilding program with the Dayang yard, we are looking forward to receiving our progress shipbuilding payments of about $18 million for the two Ultramax vessels which we demanded and expect to be refunded. Additionally, the optionality we introduced in our remaining newbuilding contract for a Kamsarmax vessel allows us to be in full control of our capital expenditures. The above newbuilding developments along with a debt refinancing and several loan restructurings that we have completed or agreed and are in the process of completing during 2016 will permit us to use a significant part of the newbuilding contract payments to be refunded for investments in other vessels as part of our continuing effort to take advantage of market opportunities, especially, in the current depressed market environment. "