Algoma Central Corporation announced earlier this week that it has received payments totaling $41.7 million from two Chinese banks on refund guarantees related to the cancellation of three ocean tanker shipbuilding contracts which occurred in 2010.
In 2007, Algoma, through its wholly owned subsidiary, entered into contracts to build three 16,500 - deadweight ton product tankers in China. Each contract contained provisions that permitted cancellation under certain conditions. These conditions were met in 2010 and Algoma accordingly issued notices of rescission to the shipyard seeking to cancel the contracts and demanding reimbursement of the installments that had been advanced.
The matter was then taken to arbitration by the shipyard, and hearings were conducted before a Arbitration Tribunal in London in September, 2012, which found found in favor of Algoma in all matters in April, 2013. The shipyard sought leave to appeal, and U.K. commercial courts rejected the shipyard's application in November, allowing Algoma to commence collection action immediately thereafter.
"We are extremely pleased to announce the collection of these outstanding installment refunds," said Greg Wight, President and CEO of Algoma. "The collection process has proceeded smoothly following an arduous arbitration and appeal process that extended over three years from the date we cancelled the contracts. We would like to formally thank the Banks for their actions in closing these files."