China's Yangzijiang Shipbuilding has confirmed the termination of contracts for four MR oil tankers ordered from its subsidiaries by an undisclosed buyer.
In a regulatory filing posted on the Singapore Exchange on Saturday, September 27, Yangzijiang Shipbuilding stated that its subsidiaries the Jiangsu Yangzijiang Shipbuilding Group, Jiangsu New Yangzi Shipbuilding, and Jiangsu Yangzi Xinfu Shipbuilding had terminated contracts for an aggregate of four 50,000DWT MR oil tankers entered into with a specific buyer.
The contracts for the four ships had a total value of US$180 million. Deliveries were originally scheduled for 2026 to 2027.
Yangzijiang Shipbuilding said the subsidiaries terminated the contracts following certain critical information just disclosed by the buyer, but had not been previously known to the subsidiaries, despite earlier extensive due diligence on the part of the buyer and its shareholder.
According to Yangzijiang, the critical information contains allegations that the buyer's sole shareholder was involved in a scheme to circumvent US sanctions laws and regulations.
In light of these development and based on legal advice that they have received, the subsidiaries have determined that the buyer is in anticipatory repudiatory breach of the contracts.
Alternatively, the contracts have been frustrated as a result of the supervening illegality associated with the buyer's payment obligations. Accordingly, the contracts have been terminated, and the subsidiaries have reserved all of their legal rights against the buyer.
Construction on one vessel had already commenced by the time the contracts were terminated.