Wellard, owner and charterer of an ASX-listed livestock trailer, is expected to receive an AU $ 17 million raise after successfully resolving the arbitration over the termination of a shipbuilding contract in 2018.
Wellard issued a statement late last week stating that it has successfully resolved its London arbitration proceeding against the Croatian Bank for Reconstruction and Development (HBOR) and is entitled to receive payments over interest of approximately AU $ 17 million (US $ 12 million) within 14 days.
HBOR has issued Wellard’s subsidiary, Wellard Ships Pte Ltd, money-back guarantees backing Wellard’s terminated 2015 contract for the construction of the planned livestock vessel as M / V Ocean Kelpie with Uljanik dd shipyard ( Uljanik).
Wellard said that when HBOR disputed the payment under the money back guarantees, it was forced to enter arbitration to recover all of the money it paid Uljanik under the shipbuilding contract, plus costs and interests.
In 2019, however, the Uljanik dd shipyard was placed in receivership, which resulted in total insolvency. The result was that the repayment could not be made to Wellard, who was an unsecured creditor.
Arbitration proceedings were subsequently initiated against HBOR to enforce the two reimbursement guarantees which secure the down payments made by Wellard to Uljanik.
The repayment guarantees were for prepayments of US $ 8.0 million and € 1.6 million made by Wellard, plus accrued interest until full repayment was made. The precise amount received will be indicated by Wellard in its statutory financial reports.
“Wellard is pleased to have been able to recover these sums after two long and complex arbitrations carried out over several years,” said Wellard Executive Chairman John Klepec.
“This is a fair and appropriate result in the circumstances, demonstrating the importance of effective risk mitigation that money back guarantees offer in the shipbuilding industry.”
Wellard said the costs in the case have been reserved and that he will assess and claim his reasonable costs.
The dispute with HBOR was submitted to arbitration in London with application of English law.
Under the ruling, payment must be made within 14 days.
In an independent case, Wellard confirmed that it had agreed with Ruchira Ships Limited to postpone the takeover of M / V Ocean Ute from the previously announced date of December 24, 2021 to January 25, 2022.
He said there had been no substantial economic or operational changes to the transaction.
The completion of the buyback agreement on January 25 means that from that date Wellard will own the M / V Ocean Ute.