Greek tanker company Eletson Corp has seen China's CSIC Leasing arrest three of its ships in Singapore and the Bahamas — compounding the problems it has with vessels it refinanced in Chinese leasing deals about three years ago.

Documentation filed with the Singapore High Court shows the leasing arm of China Shipbuilding Industry Corp securing the arrest of the 69,400-dwt Strofades (built 2006).

Court papers also show that CSIC Leasing has arrested another pair of Eletson ships — the 69,700-dwt Antikeros (built 2004) and 69,500-dwt Dhonoussa (built 2005) — that vessel trackers show anchored in the Bahamas.

The detentions have emerged following TradeWinds' reports of similar disputes on other tankers refinanced in 2017 with China's Cosco Shipping Leasing and Bank of Communications Financial Leasing (Bocomm Leasing).

Eletson refinanced the three ships, alongside a fourth, the 69,500-dwt Polyaigos (built 2005), with CSIC Leasing in the summer of 2017. It was the Chinese company's first ship lease financing transaction, according to a statement at the time by Watson Farley & Williams which advised on the deal.

Under the $65.5m transaction, it leased the quartet back to Eletson under bareboat charters.

Eletson used the proceeds of the deal to refinance a balloon payment of loans secured on the vessels, which it bought from Greek peer LMZ Transoil during the 2007 shipping boom for more than $60m apiece.

Eletson agreed to pay CSIC Leasing about $150,000 per month in fixed charter hire for the Strofades.

However, according to the Chinese company Eletson has been falling short on payments. As a result, CSIC Leasing issued notices to terminate the bareboat charters on all four ships and asked Eletson to re-deliver them.

Negotiations for an amicable settlement have failed.

In CSIC Leasing's arrest filing, it demands $15.1m to terminate the Strofades bareboat charter. This amount includes $11m in outstanding principal payments on the ship’s financing, and overdue charter hire of about $3.8m from all four tankers.

Eletson managers did not respond to a request for comment.

According to the court documents, Eletson lawyers dispute the validity of CSIC Leasing's termination notices, as well as the amounts owed and ship valuations. They also protested that the Bahamas anchorage designated for the Dhonoussa and Antikeros is unsafe for the vessels.

“Various people, alleged to be connected with the arrests, but without any proper documentation, have forced themselves on board, and threatened the master and crew of both vessels,” a lawyer for Penningtons Manches Cooper said in the email exchange included in the court documents.

“These include threats to take them off the vessel and put them in prison,” the lawyer added.

Financial pressure

Eletson has been having trouble with other tankers it refinanced in Chinese leasing transactions in 2017.

As TradeWinds reported, Cosco Shipping Leasing — part of the giant China Cosco Shipping group — arrested the 109,900-dwt Folegandros and Kastelorizo (both built 2019) over unpaid charter hire.

Eletson Corp vice president Vassilis Kertsikoff. Photo: Capital Link

Both ships are still immobilised with the Folegandros anchored off Galveston, while the Kastelorizo is at Teesside oil terminal in north east England.

Separately, Bocomm Leasing had threatened to arrest the 109,900-dwt Salamina (built 2019) and sistership Argironissos (built 2018).

However, that dispute may have been defused after Eletson agreed to sell the vessels for $41m each to Zodiac Maritime.

The sales leave Eletson with a fleet of 16 tankers. According to shipping sources, 10 of them have been refinanced through leasing arrangements, including all the vessels mentioned above.

Subsidiary Eletson Gas owns and operates 14 gas carriers with a combined capacity of nearly 300,000 cbm.

In earlier comments to TradeWinds, Eletson blamed the fallout from Covid-19 as holding up the planned restructuring of the tankers' refinancing as freight rates plummeted in the wake of the pandemic.

However, the company, has faced financial pressure before. In the summer of 2018, it carried out a debt restructuring that saw it replace $300m-worth of mortgage notes with new paper offering bondholders a whopping 12% coupon.

In January 2019, the company announced it was involved in fresh talks with note holders. It has not provided any public update.

Since then, Eletson is believed to have sold up to seven ageing tankers on the secondhand market — two post-panamaxes and five LR1s, built between 1999 and 2004.