Eitzen Chemical to lose $10m after cancelling new tankers

08 April 2009 22:40  [Source: ICIS news]

HOUSTON (ICIS news)--Eitzen Chemical expects to lose $10m (€7.5m) for the cancellation of five new tankers, the Norway-based shipper said on Wednesday.

And parent Camillo Eitzen said it would cancel six gas carriers and cut spending by about $105m.

Both companies cited the global economic downturn's effect on freight volumes and rates as the reason for the cancellations. Earlier this month, a German bank issued a report saying there was a "toxic imbalance" in the chemical tanker market due to an oversupply of vessels and an undersupply of cargoes.

Both shippers said they are in discussions with lenders to restructure debt. Both also reported huge losses in February.

Eitzen Chemical lost $190.3m in the fourth quarter of 2008 and Camillo Eitzen lost $287.2m in the quarter.

Eitzen Chemical claims to be the third largest chemical shipper in the world based on fleet size, with a fleet of 88 vessels.

The company still has three new tankers on order and took delivery of the Sichem Osprey, a 25,000 deadweight tonne (dwt) tanker, on 7 April from a Korean shipyard. So far this year, Eitzen has taken delivery of four new chemical tankers.

Camillo Eitzen said its cancellations will cost $2.5m in fees. Eitzen Chemical's $10m in losses will also come from cancellation fees.

Eitzen Chemical said it will negotiate to change the terms of its deal with a bank syndicate led by Nordea. The company said its total debt was just above $1bn, including lease obligations and some bond debt.

Shares in Eitzen Chemicals closed at Norway kroner (NKr)3.50 on the Oslo bourse, up from 3.3 at Tuesday's close. Shares in Camillo Eitzen remained untraded.

($1 = €0.75)

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By: Lane Kelley
+1 713 525 2653



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