Wellard Ships, a Singapore-based unit of Australian livestock shipping firm Wellard, has received a termination notice of the newbuild contract from the Croatian shipbuilder Uljanik.
The ship in question is MV Kelpie, a livestock carrier of approximately 12,500 m2 net pen area, originally commissioned by contract with Uljanik in March 2015.
Earlier this year, Wellard announced in its financial report that it was commencing negotiations to either exit or delay the build contract and that it was possible the company may breach commitments under the contract.
“Wellard will immediately asses its response to Uljanik in order to protect its rights under the contract,” the shipping company said in a statement.
In its FY18 Annual Report, Wellard chose to fully impair the AUD 13.8 million (USD 9.8 million) value it had on its balance sheet at June 30, 2018, reflecting advance payments made under the Uljanik contract.
In a separate statement, Uljanik said the contract was terminated due to “Wellard Ships’ failure to fulfill its contractual obligations”. As explained, with this move, Uljanik wants “to protect its contractual rights and interests.”
According to Uljanik, all shipbuilding activities related to the abovementioned vessel were ceased earlier, upon request of the shipowner. The physical production has not begun yet, Uljanik added.
The troubled Uljanik shipyard, which is on the verge of bankruptcy, is in search of much-needed funds that would help the company stay afloat. The company was forced to restructure amid a downturn in the global shipbuilding industry coupled with rising competition on the Asian continent.