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November 7, 2008

Hellenic Carriers walks from Supramax acquisition agreement

Dry bulk operator Hellenic Carriers Limited (AIM: HCL) has cancelled an agreement to acquire a 2001-built Supramax and is not only forfeiting a $6.9 million deposit but is also paying a $1 million cancellation fee.

A statement from Hellenic says that "in view of the current market conditions," its subsidiary, Axios Maritime Corp, has entered into an agreement with Great Homes Maritime S.A. to withdraw from acquiring the M/V FURNESS TIMIKA, a 2001-built 52,508 DWT Supramax. Axios contracted to acquire M/V FURNESS TIMIKA on July 8, 2008 at a price of US$69.7m and delivery was originally expected to take place between September 15 and November 15, 2008.

"The severe financial crisis and the prevailing poor dry bulk freight rates have led to a substantial weakening in the sale and purchase market for dry bulk vessels. In view of these market conditions and following negotiations with the Seller, Axios has decided to withdraw from the contract to acquire M/V FURNESS TIMIKA in consideration for a payment of US$1m to the Seller. Since Axios will not be taking delivery of the vessel, the deposit of US$6,970,000 paid in July 2008 will also be released to the Seller."

Hellenic Carriers CEO Fotini Karamanlis said: "Since July 2008, when the contract for the acquisition of M/V FURNESS TIMIKA was entered into, the markets across the board have undergone an unprecedented change. The lack of credit has resulted in a significant reduction in dry bulk trade and weakening of sale and purchase activity, which in turn has had a negative impact on vessels' values.

"Although the long-term fundamentals of dry bulk shipping are positive, the vessel's current earning capacity could not support its contracted price. The Board of the company decided that the termination of the contract for the acquisition of the vessel by Axios on the terms agreed is in the best interests of the company and its shareholders. In particular, this decision safeguards the company's liquidity and further enhances its ability to seek for opportunities in a different market environment."


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