From LLoyds ListqteBulk owner Armada (Singapore) and at least...

From LLoyds List

qte

Bulk owner Armada (Singapore) and at least five other operators are suing
> Fortescue Metals Group with claims so far totalling US$135m, after the
> iron ore
> producer said it had "severed" all shipping contracts and would no longer
> operate a shipping fleet, writes Keith Wallis, Hong Kong and Michelle
> Wiese
> Bockman, London.
>
> This came as an investment bank estimated that Fortescue could be looking
> at
> total losses of US$300m on charters fixed to the end of 2010.
>
> Fortescue, Australia's third-largest iron ore producer, advised earlier
> this
> month it was "suspending" all cost-and-freight (CFR) contracts of
> affreightment
> and consecutive voyage contracts, "due to unforeseen circumstances".
>
> Most of the ships it chartered were agreed at some of the highest rates
> paid for
> period charters, right at the top of the market.
>
> A Fortescue spokesman told Lloyd's List in London yesterday that the group
> sought to terminate all shipping contracts, with mediation now under way
> "in a
> number of cases" with individual shipping owners.
>
> The spokesman confirmed this would see ships redelivered early, and future
> contracts cancelled.
>
> Deals signed over the last year included contracts of affreightment up
> until
> 2014, as well as one five-year and another 10- year time charter.
>
> Legal action has been taken against the company over 10 contracts, with
> some of
> the world's largest shipowners, including Belgium's Bocimar and
> Switzerland's
> Armada Shipping, caught out by Fortescue's cancellations. In Greece, the
> Angelicoussis Group, Alpha Tankers and Freighters International, and
> George
> Economou's Classic Maritime have contracts with Fortescue.
>
> The Angelicoussis Group has filed the largest claim in New York's Southern
> district court for damages, for US$129m.
>
> Classic Maritime is suing for US$3.8m. Armada, an offshoot of
> Switzerland's
> Armada Shipping, is claiming US$2.5m in damages after Fortescue told the
> company
> that one CFR shipment due in December "was not going to happen".
>
> Armada's contract includes terms for a further 63 cargoes, until 2014. It
> also
> has a "rule B" attachment, which works like a lien so that any US dollar
> payments made to Fortescue through the US bank clearance system are
> frozen.
>
> An Armada insider confirmed that while legal action was taken in New York
> "to
> secure the claim", the dispute would be settled by arbitration in London.
>
> Bocimar has a five-year agreement with FMG to charter the newly-delivered
> 177,000 dwt, 2008-built FMG Matilida for an unspecified rate.
>
> Bocimar signed deals in December 2007 to charter two capesize vessels to
> Fortescue, one for five years and another for 10 years.
>
> Bocimar did not return calls last night about the future of these
> contracts.
>
> Alpha Tankers and Freighters International, which chartered a capesize
> vessel to
> Fortescue for five years at US$85,000 per day in August, said it had not
> been
> asked to cancel or suspend the contract.
>
> Fortescue, which began iron ore shipments in the first half of 2008, said
> it
> would sell about 66% of its iron ore sales CFR terms.
>
> The company said most of its sales would now be on a free-on-board basis.
> Earlier statements put this figure at a third of future sales.
>
> Morgan Stanley said Fortescue could have fixed long-term charters at rates
> of
> about $20 per tonne in the first six months of this year.
>
> Consequently, total losses on charters fixed for voyages between the
> second half
> of this year and the end of 2010 could top US$300m.
>
> In a statement Fortescue said: "Fortescue sought legal advice before
> taking its
> decisive action under the contracts and will continue to do so in the
> prudent
> management of this issue."
>
>