Hyundai Heavy secures refund guarantee for two oil tankers

South Korean shipbuilder Hyundai Heavy Industries has secured a refund guarantee in connection to a recent order to construct two oil tankers for a Greek shipowner, Yonhap News Agency reported industry sources as saying.

The refund guarantee is provided by a group of banks led by KEB-Hana Bank.

These guarantees allow shipowners to reclaim the money already paid as part of a contract in case shipbuilders default.

Yonhap did not reveal the name of the shipowner, however, according to data published by VesselsValue, Enterprises Shipping and Trading placed an order for two 158,000 dwt tankers with Hyundai Heavy in late August.

Although the price of the vessels was not disclosed, VesselsValue said that the market value of each of the ships stands at USD 58 million. The new ECO Suezmaxes are scheduled to join their owner in 2018.

It is becoming increasingly harder for South Korean shipbuilders to secure refund guarantees as banks are reluctant to expose themselves to the risks within the country’s struggling shipbuilding industry, which saw the lowest level of orders in the first half of 2016.

South Korea’s Big Three – Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. – accumulated a combined operating loss of USD 7.4 billion last year alone, with DSME responsible for nearly two thirds of the total loss.

As a response to the global slowdown, South Korean government recently launched a corporate restructuring plan, targeting its financially troubled industries, including its shipping and shipbuilding sectors.

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