Paragon Shipping cancels 4,800 TEU containership newbuild contract

9 December 2013 (Last Updated December 9th, 2013 18:30)

Paragon Shipping, a global transportation firm, has inked an agreement with a Chinese shipyard to cancel one of its two 4,800 TEU containership newbuilding contracts with no cost to the firm.

Paragon Shipping, a global transportation firm, has inked an agreement with a Chinese shipyard to cancel one of its two 4,800 TEU containership newbuilding contracts with no cost to the firm.

The agreement also includes the transfer of a deposit amount for the remaining vessel and reduction in the firm’s contract price from the actual $57.5m to $55m.

Following these changes, the shipping firm will have one 4,800 TEU containership newbuild on order with $23m, or about 42% of the purchase price, which is already funded.

This container will be delivered in the second quarter of 2014. The final installment due on delivery will be funded by the company through a loan facility with China Development Bank.

Paragon Shipping has granted an option to acquire the containership under construction to Box Ships.

Meanwhile, the company announced it has bought two additional Eco-Design Ultramax newbuilding drybulk carriers from an affiliated entity with scheduled deliveries in the second quarter of 2015.

Built in Yangzhou Dayang Shipbuilding, a member of the Sinopacific Shipbuilding Group, the two Ultramax newbuilds will have a carrying capacity of 63,500 dwt each.

The Ultramax vessels are sister ships to Paragon’s existing two Ultramax ships, which are under construction at the same yard and expected to be delivered in 2014. The total consideration for these two new Ultramax newbuildings is $56.5m.

Commenting on the developments, Paragon’s chairman and CEO Michael Bodouroglou noted that the cancellation and reduction in price of the containership newbuilding improves the company’s equity position, offering greater flexibility as it can now take delivery of the containership with little or no additional equity.

"We now have 13 vessels on the water and we believe this recent positive event will result in additional long-term growth for the company. By acquiring the two additional Eco-Design Ultramax newbuildings, our newbuilding programme has grown to six vessels, including the one containership, to be delivered starting December 2013 through to the middle of 2015," Bodouroglou added.

Paragon Shipping’s current fleet consists of thirteen drybulk vessels with a total carrying capacity of 816,472 dwt.