Large-sized shipowners which have been suffering from deteriorating shipping market are said to have asked Korean banks including Korea Eximbank for $1.3bn in ship financing in a bid to procure money to pay for the ships being built in Korean shipyards.

Korean shipbuilders, for their part, are not delivering around 30 large-scale ships even after the construction of them has been completed because the shipowners have not paid the last installments for the newbuildings.

According to a government document a Korean local newspaper exclusively obtained, titled ‘Current Situations about Newbuildings Requiring Financing, big shipowners such as France’s CMA CGM, Taiwan’s TMT, and Swiss’s MSC had not paid the balance and asked Korean banks including Korea Eximbank to provide about $1.29bn in loans.

These shipowners are in a managerial quagmire due to the worst-ever shipping market and could not pay the balance which takes up 20% of a total ship price on average.

They ended up being unable to take delivery of the ships they ordered. So they have finally asked for the financial support from Korean banks.

An official from the Korea Eximbank said, “Shipowners have asked for funding on the conditions of three-year postponement of repayment and repayment in installments for three years, etc.”

“After reviewing all the qualifications needed, the fund will soon be given to the shipowners without problems. However, as for the case of CMA CGM, the bank is watching carefully the movements of its creditors because the fund comes from taxes. “

If the financial support that shipowners asked for to solve the problem of delivery delays is not given early enough, the shipbuilding industry would have to shoulder more financial burdens as time goes by.

The worst scenario is that shipbuilders could sell the ships which have not been delivered yet to a third-party shipowner.

But it is unlikely given the current situations of the market and it is also unrealistic considering the long-term relations between the shipbuilders and the owners.

As shipbuilders have received 80% of the total ship prices, shipowners are expected to seek for every method to receive delivery of their newbuildings.

Source: Asiasis

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