Belgian shipowner Compagnie Maritime Belge (CMB) has enlisted South Korea’s Hanjin Heavy Industries & Construction (HHIC) to complete two LR2 newbuildings.
The two unfinished vessels were left at the dry docks of daughter company Hanjin Heavy Industries & Construction Philippines (HHIC-Phil) in Subic Bay for more than 18 months.
But several parties are close to completing a deal that will see them delivered next year, CMB chief commercial officer Benoit Timmermans said.
"It needed more than two to tango, and technically it's not done yet," he said.
"But the yard is preparing the hulls and the plan is to tow the ships to mainland Korea to finish them there."
Delivery next year
The two 114,000-dwt product tankers are part of a four-ship order CMB placed at HHIC-Phil in 2016.
HHIC will be paid $52.4m when it delivers the pair, which shipbuilding sources said will happen in the first half of next year. This could be slightly later, as Timmermans said they are earmarked for delivery in the third quarter of 2021.
HHIC was not available for comment for this story.
“These two tankers were about 70% built when HHIC-Phil shut down early last year,” a shipbuilding source who is familiar with the deal said. "CMB will have the LR2s towed from Subic to Busan."
Subic-based HHIC-Phil filed for a court rehabilitation programme in January last year when it ran into financial difficulties and defaulted on a $400m loan. The shipyard ceased shipbuilding production two months after the court application.
First in six years
CMB’s LR2 contract is said to be the first “commercial shipbuilding” contract for HHIC in six years. The last newbuilding order that the Busan-based shipyard received was in 2014 when Greek shipowner Poseidon signed up for two capesize bulkers.
Stiff competition from rising Chinese shipyards and low shipbuilding prices were cited as reasons that led HHIC to stop marketing and contracting commercial vessels. It then turned its focus to building military and training vessels.
HHIC was founded in 1937 and is the oldest shipyard in South Korea. The company was formerly owned by the Hanjin group but is now under the control of creditors led by Korea Development Bank.
HHIC’s creditors hold a 83.4% stake in the company, which they have put up for sale.
No comeback
Some industry watchers initially thought CMB's tanker contract could lead to a return to building commercial vessels for HHIC, but this is not the case.
“CMB’s contract is a special arrangement with HHIC. The shipyard is not going back to building commercial ships,” a shipbuilding source said. “Its future is unknown, since the company is on sale.”
Meanwhile, HHIC-Phil is on track to be taken over by Australian shipbuilder Austal and US fund Cerberus Capital Management.
“The new owners are looking to have HHIC-Phil transferred to them this year,” the source said.
He added that Austal will operate the shipyard, and it is not clear what type of work the Philippines shipyard will be involved in after the handover.
