Dryships Cancels Newbuild Orders at Rongsheng

rongsheng heavy industries shipyard shipbuilding
File photo of the Rongsheng Heavy Industries shipyard in Nantong, Jiangsu province December 4, 2013. (c) REUTERS/Aly Song

NASDAQ-listed DryShips Inc. (DRYS) says it has pulled the trigger on the cancellation of newbuilding contracts for four four ice-class panamax bulker vessels with Jiangsu Rongsheng Heavy Industries in China.

DryShip’s says it reached an agreement with the shipbuilder in exchange for the refund of all installments paid to RSHI plus interest, which DryShips says it has received in full.

The cancellation of the newbuild orders has been suspected since February when DryShips executives said that they weren’t sure if debt-ridden Rhongsheng had even cut steel yet on the vessels, which were originally scheduled to be delivered in 2014.

“We don’t want to make any more payments to Rongsheng,” Dryships CFO Ziad Nakhleh told Reuters in February. “Things are getting worse not better.”

Dryships Inc. reportedly put down a $11.56 million downpayment for the vessels and expected a refund of the money plus 8 percent interest if Rongsheng failed to deliver.

Jiangsu Rongsheng Heavy Industries operates as a subsidiary of China Rongsheng Heavy Industries, China’s largest private shipbuilder, which said last week that its first-half 2014 net loss widened more than ten times compared to 2013 and it was planning to make an announcement related to the group’s restructuring soon.