Hyundai Heavy Industries is in order talks with companies for up to 16 VLCC newbuildings worth $1.4bn.
Industry sources said Seoul finance company Everest Korea Finance Advisory has inked a letter of intent (LOI) with the South Korean shipbuilder for 10 VLCC newbuildings priced at about $85m apiece.
Everest Korea has also approached unnamed domestic shipbuilding technical companies to act as newbuilding consultants.
An HHI executive declined to comment, citing contract confidentiality.
Long-term charters?
Everest Korea is understood to be backed by Chinese investment company Everest Venture Capital, also known as Everest VC, which has offices in Shenzhen and Beijing.
According to Everest VC’s website, it was founded in 2007 by Chinese national Xiao Jiancong and has more than CNY 7bn ($1bn) in assets under management.
TradeWinds contacted Everest VC in Beijing, but an executive said the outfit does not currently have any shipping business in its portfolio.
Sources said Everest VC’s interest could be driven by Everest Korea’s owner, Kim Do Yun.
They said his previous finance company, Zenith Partners, signed an LOI with Samsung Heavy Industries eight years ago for a series of LNG carrier newbuildings. However, the deal did not materialise since he did not line up charter contracts for the ships.
Industry sources said Everest Korea’s VLCCs newbuildings at HHI will be firmed up only if it secures long-term charter contracts for the ships. It is said to be using a South Korean broking shop to find employment.
Shipbuilding players are doubtful that Everest Korea’s LOI at HHI will materialise into an official contract.
“It is not easy to find charterers that are willing to fix vessels under long-term basis these days,” a shipbuilding player said. “Most of them fixed their vessels up to three or five years only.”
Separately, brokers said HHI had signed two-ship LOIs with several Greek shipowners — or was in serious discussions with them — for VLCC tonnage priced between $84m and $85m.
They said this was the result of an earlier “charm offensive” visit to key clients by the yard’s senior management.
Brokers named one owner rumoured to have pencilled in an LOI as Latsco Shipping. It did not respond to TradeWinds’ request for confirmation.
Rock bottom
Tsakos Energy Navigation is another said to be in discussions. But market players said it is unlikely to move ahead without firm charter business for the vessels.
Kyriakou family-controlled Athenian Tankers is also among those named. But TradeWinds understands it has not signed an LOI with the yard.
Prices for VLCCs have been falling at South Korean yards.
Market players said there had been an expectation that prices would need to touch a rock-bottom $80m to $82m before owners were prepared to move.
A tanker player said it made sense to order VLCC newbuildings now, as the current price is around $85m.
“This is an attractive price. The number of VLCC newbuildings on order is also small,” the tanker expert said. “[The] current Libor interest rate of 0.25% is also low, making borrowings cheap.”
HHI has netted six VLCC orders in the past few weeks, signing up Kyklades Maritime, Evangelos Pistiolis and Cido Shipping for two ships
