Two HNA Group affiliates are on opposite sides of a financial dispute after the botched handover of a containership from Zhoushan-based Jinhai Intelligent Manufacturing.

Legal, financial and commercial sources told TradeWinds that the 11,568-teu MSC Bianca (built 2019) was delivered with construction debt unpaid and arrested at sea by coastguard vessels before it could leave Chinese waters.

The ship was ninth in a 10-ship order by Oslo-based SinOceanic Shipping for long-term charter by Mediterranean Shipping Co (MSC). At delivery two weeks ago, the ship was immediately transferred to a new owner, a leasing entity set up by Japan's Financial Products Group (FPG).

Unaware of claim

Sources directly involved with the deal said SinOceanic, MSC and FPG were all unaware that the ship was still subject to a construction finance claim by Zhejiang-based financier Zheyin Financial Leasing, a subsidiary of China Zheshang Bank.

After Zheyin Financial told the Shanghai Maritime Court it had not been repaid about CNY 125m ($18.6m) it had advanced for construction of the ship, the court ordered the ship to be arrested.

MSC and SinOceanic are understood to have worked to supply security but were unable to effect release until last Tuesday. Sources blamed the long delay on technical issues in money transfers between MSC's banker Citibank and the court's bank, Industrial and Commercial Bank of China.

Money transfer delay

Although sources said the ship has been freed from legal arrest, vessel tracking sources showed it at anchor in the Zhoushan islands on Wednesday.

The delayed money transfers caused the ship to miss its first loading, so MSC is expected to file a further claim for business interruption.

Sources directly involved in the deal said the contract obligated SinOceanic to cover the unknown debts for MSC, and that SinOceanic is the source of the cash.

Rather than suing the yard, SinOceanic is expected to recoup its loss with deductions from payments on the final ship in the series, the 11,568-dwt MSC Aino (Hull No 237, to be delivered 2019).

Complicating relations

The arrest further complicates the business relations between SinOceanic and Jinhai Intelligent Manufacturing.

Both were previously controlled by China's embattled HNA Group. SinOceanic was originally set up by HNA as a financial vehicle for Jinhai Intelligent Manufacturing's containerships.

But as TradeWinds has reported, HNA no longer holds the majority share in SinOceanic, which is trying to accommodate a request by the cash-strapped shareholder to cut the stake further and return invested capital.

Zheyin Financial, FPG and Jinhai Intelligent Manufacturing officials could not be reached for comment and SinOceanic declined requests.

MSC has been caught up in that dispute as an entirely innocent party and is glad the vessel has now been released to enable her to start trading

MSC spokesman

MSC innocent

An MSC spokesman would not comment on any commercial circumstances of the dispute but said the arrest relates to a leasing company, with which it has no relationship, and the shipyard.

“MSC has been caught up in that dispute as an entirely innocent party and is glad the vessel has now been released to enable her to start trading,” he said.

Jinhai Intelligent Manufacturing's orderbook includes a further series of containerships for SinOceanic, plus several VLCCs that are understood to be in blocks and without an active customer.

Yard's status unclear

Yard sources said that despite previous reports that Jinhai Intelligent Manufacturing is taking no new orders, its marketing efforts continue, as do its shiprepair activities.

HNA is one of several high-profile Chinese companies that borrowed heavily to invest in international acquisitions but has struggled due to changes in Chinese state policy.

Its shipping arm has pursued a prolonged campaign to sell its remaining bulkers, but has not sold any recently.