Officials have accepted bids in a Hong Kong High Court auction for three former Brightoil Petroleum aframax tankers and a VLCC arrested there.
Sources in Hong Kong with knowledge of the auction process confirmed this week that the second round of bidding produced offers acceptable to the court for the three aframaxes. The ships involved are the 107,500-dwt Brightoil Legend, 115,600-dwt Brightoil League and 115,400-dwt Brightoil Lucky (all built 2009).
Galaxy sale approved
TradeWinds has reported separately on the successful auction sale of the 319,700-dwt VLCC Brightoil Galaxy (built 2012), which has also been approved by the Hong Kong High Court bailiff.
According to commercial sources in Greece, UK-based Union Maritime bought the Brightoil League and Brightoil Lucky for $21m each, while, Athens-based Avin International picked up the Brightoil Legend for just less than $20m.
The prices appear to be a bargain relative to market levels, where VesselsValue estimates vessels of these characteristics are worth between $24.5m and $25m.
Company officials were not available for comment at the time of writing.
TradeWinds understands the court notified the parties on Monday but prices and winning bidders will be made public after closing on 28 October.
Law firm Watson, Farley & Williams (WFW) represents the arresting creditor and Clarksons Asia is understood to work with the court on the sales.
The sale of the aframaxes had been clouded by rumours that no bidder had met the confidential reserve price for yet a second time.
In September, the quartet had failed to meet reserve prices in a first round, understood to have attracted 15 bidders.
Special surveys are due or overdue on all three ships, and that has posed a problem.
Some brokers had reported that the second Hong Kong round had failed because shipowners were unwilling to pay premium prices for ships that risk missing out on today's peaking tanker market.
Shipbrokers with clients in the auction told TradeWinds long queues for scrubber installations at major repair yards make it likely that the ships will remain idle for some time before even beginning the required survey work.
Obstacle swept aside
A source with insight into the auction acknowledged the obstacle but said it had been overcome.
"It's been a more difficult sales process than is customary and especially with the tanker market being quite buoyant," said the Hong Kong-based source. "There were concerns about the scrubber installation issue but it seems there was still healthy interest for the ships to go at a price acceptable to the court."
The Hong Kong court has the discretion to waive the reserve price, but parties to the process are unaware of whether this happened or what the reserve level was. Observers expect the bank to recover its claims substantially because the failed owner held a high proportion of equity in the ships when it collapsed.
Market sources believe the arresting party is Credit Suisse, which held mortgages on the largest piece of the former Brightoil fleet, which has been put under the hammer in various jurisdictions.
Hong Kong-based Brightoil’s self-made billionaire founder Raymond Sit Kwong Lam, born Xue Guanglin, started as a regional bunkering player in southern China and expanded into larger tonnage beginning 10 years ago, in addition to tank terminals. Creditors arrested its entire international trading fleet early this year. Sit resigned as chairman and chief executive officer after he was declared bankrupt in April as a result of personal guarantees he had issued.
Another Brightoil VLCC, the 319,800-dwt Brightoil Gem (built 2013), remains under arrest in China on behalf of BNP Paribas and will be sold on 19 November on the Chinese online auction platform Taobao. Other ships in the fleet formerly controlled by Sit have been auctioned in South Korea and Singapore.
Sources in Hong Kong said the sale demonstrates the advantages of Hong Kong as an arrest jurisdiction.
"Hong Kong is a cheap and fast place to arrest and sell ships," said a veteran player in vessel auctions. "It is the third most popular arrest venue in the world partly due to the reliability of its judiciary, the fact that it's got a dedicated admiralty judge, rules on priorities of claims that favour mortgagees, and a lower level of port dues and fees payable to the bailiff."
