Fincanteri falters with cruise ship order delays

Italian cruise ship builder Fincantieri has admitted that several cruise ship buyers have requested for a slowdown of delivery dates.

The state shipbuilder, which cited the weak dollar and high cost of raw materials as the reasons for the order delays, said that it had also lost a major superyacht order. The Uilm metalworkers’ union said that the Muggiano, Castellamare di Stabi, Sestri Ponente and Ancona shipyards would be affected. Furthermore, Fincantieri now fears that two ships that were to be ordered by Grimaldi might not take place at all. Military orders on the other hand continue to thrive. Fincantieri recently received a number of military orders and will takeover the US military shipbuilder Manitowoc by the end of this year.

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Debt laden C& Heavy likely to start workout program

Seoul: C& Heavy Industries, a flagship unit of the cash-strapped C& Group, is expected to ask Woori Bank and other creditors to place it under a workout program this week in a bid to stay afloat amid the deepening credit squeeze and a global economic downturn, the Korea Times reported.

If creditors accept its request, the shipbuilder will undergo drastic restructuring in return for the extension of loan maturities and an injection of fresh capital. The main creditor, Woori Bank, recently demanded that C& Heavy Industries submit a self-rescue plan, after the company had failed to pay back maturing loans for the past two months. ‘We received the self-restructuring scheme from the shipbuilder. We are currently studying the feasibility of the plan. If the company files for a workout program, we will hold a meeting with other creditors and decide what to do,’ a Woori Bank official said. Industry experts expect C& Heavy Industries to apply for the restructuring program Wednesday, when C& Group holds a bidding for its ailing construction arm, Woobang Engineering, in an attempt to sell the builder at a higher price. If 75 percent of creditors approve the plan, the shipbuilder will have its debts rescheduled or receive new loans. But in return, the company will be required to sell assets and take a range of self-rescue measures, along with a management reshuffle. It is estimated that commercial banks and savings banks have extended a total of 1.3 trillion won to 41 subsidiaries of C& Group.

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Worst yet to come for Asian dry bulk companies

Since the drop in demand for raw materials, Asian dry bulk companies have seen shipping rates come crashing down.

The Baltic Dry Index has fallen 93 percent since its peak in May, the Wall Street Journal reported. And even if there were some demand, it is increasingly difficult to secure trade finance, and investors have stopped giving shipping companies any credit for earnings or assets. Even Asia’s largest dry bulk shipping by market capitalisation, China COSCO Holdings is now trading at only 2.5 times expected 2009 earnings, which is half of the expected book value. According to the Wall Street Journal, as recently as August this year, the company was trading at five times earnings and 2.5 times book value. But it seems the worst is yet to come with further decreases in both earnings and book values anticipated when new ships, which were ordered during the shipping boom years, are delivered. DVB Bank figures as quoted by the Wall Street Journal stated that the tonnage of shipping capacity on order, due mainly in the next three years, stands at 72 percent of the existing dry bulk fleet.

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