Ocean Yield has terminated its bareboat charter contract with EMAS Chiyoda Subsea (ECS) for the Lewek Connector.
The Lewek Connector, from EMAS.
The two signed a short-term standstill deal for the vessel on 16 December.
“In order to protect Ocean Yield's legal interest, a notice of termination related to the bareboat charter has now been served,” the company said. “The company will however continue to participate in the discussions regarding a financial restructuring of ECS. Simultaneously, Ocean Yield is considering a potential short term contract for the vessel to a related company of Ezra Holdings at a reduced rate while a long-term solution is being discussed.”
As a consequence, an impairment charge of approximately US$35 million will be considered by the board of directors for the Q4 2016 results.
Following the delivery of six vessels during Q4 and the refinancing of the bonds in American Shipping Co., Ocean Yield has strong underlying earnings and cash position, so the reduced earnings from Lewek Connector is not expected to have any negative impact on the dividends in the near term.
EMAS Chiyoda Subsea Group is owned 40% by Ezra, 35% by Chiyoda and 25% by NYK.