China Shipping Companies, Pay Us or Else…

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November 25, 2011

Grand China LogisticsSHANGHAI (Dow Jones)–Grand China Logistics Holding Co.–a unit of Chinese transportation company HNA Group–said Friday that it will honor vessel-charter payments to several Greek and Norwegian firms that some of its units have withheld.

Payment will bring Grand China closer to resolving a dispute that has made the company a target of legal action overseas. Industry observers say it has damaged the reputation of Chinese shipping firms.

Grand China plans to make payment in stages, Chen Ping, director of the company’s general administration office, said in an interview with Dow Jones Newswires. He declined to give a specific timetable or other details.

Norway’s Spar Shipping AS and Greece’s Vafias Group said last week Grand China had withheld payments for several months.

On Thursday, Harry Vafias, managing director of Vafias Group, said that the situation has “got worse,” with outstanding payments on a single vessel charter exceeding $2.2 million, excluding legal fees.

“If you include the legal fees it’s $2.5 million and growing,” Vafias said. “It’s a joke.”

A spokesman from Spar Shipping was not available for comment Friday.

In October, Vafias obtained an injunction in the U.K. freezing some of Grand China’s assets there, while Spar shipping withdrew its vessels after payments stopped.

Not all have resorted to such strategies.

In an emailed statement, South Korea’s Hyundai Merchant Marine Co. confirmed to Dow Jones it is talking with Grand China subsidiary Grand China Shipping about arrears for one dry bulk vessel. It said it won’t take legal action. It added that the situation will have “very little impact” on HMM’s broader operations.

Without elaborating, Grand China’s Chen also confirmed Friday that one of its units also owes money to Oslo- and Singapore-listed Golden Ocean Group Ltd. (GOGL.OS).

Grand China’s payment delay is the second dispute between ship owners and a Chinese customer this year amid a slump in commodity prices. It follows a dispute involving shipping giant China Cosco Holdings Ltd.

-By Andrew Galbraith, Dow Jones Newswires


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