COSCO Cancels at Its Own Yard

Meanwhile, a rather intriguing development started to unfold at COSCO. COSCO Corporation – the Singapore listed shipbuilding arm of the Chinese shipping conglomerate has announced this week that its parent COSCO Group has out-rightly cancelled eight 57,000 dwt bulk carriers and re-scheduled the delivery of another three bulk carriers of the same size. The cancellations from the parent caught analysts by surprise and many have expressed concerns over the financial impacts on the shipbuilder. COSCO Corporation says the buyers will not pursue the late delivery claims and all deposits will be returned. The total value of the cancelled orders is SGD 298.7 million (USD 205 million).

The three re-scheduled vessels that were supposed to be delivered between June and December last year will be delivered August 2009 and October 2009. Considering that the delivery was long overdue and there were no prior disclosures on the delays, investors have ample reasons to worry about the shipyard’s transparency.

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