Greek Shipping Company Gets Hit With Defaulted Junk Bonds

Thursday, August 09, 2001
A Greek-owned shipping company said on Thursday it would seek damages from holders of its defaulted junk bonds who last week "arrested" one of the company's ships as security for a $175 million repayment claim.

The 25,900 gt Ocelotmax has been held in the port of Pusan, Korea since August 4, and is unable to trade until released.

Enterprises Shipholding defaulted on the bond's $7.76 million semi-annual interest coupon in July. "Due to this wrongful attachment (arrest), the company has immediately experienced a loss of hire of thousands of dollars per day and exposed itself to... massive claims by cargo interests," said an Enterprises statement on Wednesday.

"The company intends to seek compensation for all damages arising out of the attachment," it added. The bondholders said on Tuesday they had arrested the ship to secure the "unquestionable right to judgement and payment of their claims against Enterprises".

Talks broke down between the two parties in recent months after Enterprises refused to recognize the bondholders' financial advisor.

The bondholders are largely U.S.-based investment funds, while Enterprises Shipholding is controlled by Greek shipping entrepreneur Victor Restis and is incorporated in Liberia.

The Enterprises statement also said it would be seeking damages from bondholders' alleged attempts in a press release to link Enterprises Shipholding to the Restis family as a whole.

The Restis family are key players on the Greek shipping scene. A Restis-controlled company successfully bought out the bulk-shipping interests of South Africa's Safmarine in April 1999.

In the same year, a Restis-backed alliance failed in a bid to take control of leading tanker player Golden Ocean, which had also defaulted on a junk bond coupon.

The shipping industry tapped the U.S. junk bond markets extensively between 1997 and 1999. Since then, many shipowners have defaulted on their bonds, and much of the debt has been bought back having traded down to less than half its original value.

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