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|FMG Settles Shipping Dispute With Angelicoussis Shipping Group|
|= With rescheduled three new time charter contracts, etc. =|
Australian iron ore developer and producer Fortescue Metals Group ("FMG") announced September 11 it has reached agreement to settle its shipping dispute with Splendour Special Maritime Enterprise which is part of the Angelicoussis Shipping Group ("ASG") over its suspended time-charter contract. Under the settlement agreement terms, ASG will discontinue its legal proceedings against FMG.|
Following previous settlements over shipping contracts dispute with Bocimar International NV and Classic Maritime, FMG has continued to review the contractual status of its remaining counterparts. The settlement reached with ASG this time envisages the following key terms:
- FMG is to pay to ASG an upfront amount of US$5.25 million upon which the arbitration action in the United Kingdom will be withdrawn and the Rule B Attachment Orders sought in the United States will also be discontinued;
- FMG will restructure its future cargo obligations with ASG whereby three new time-charters have been agreed with respective terms of 5 years, each commencing progressively from October 2009 out to end June 2010;
- The freight rate under the restructured charter arrangement has been set at a base daily rate, which is slightly under the current market rate, plus a hire "incentive" payment of an additional 50% on the base rate. The incentive payment includes a profit share arrangement where the amount paid is reduced if future market rates trade above the base rate during the terms of the charters. Under the share agreement, if rates trade above the base rate up to the "incentive" rate, then all profits are retained by FMG. When rates trade above the incentive level, the profits are split 50 : 50 between FMG and ASG.
There still remain three counterparts with whom FMG has suspended shipping contracts with tenures ranging from 3 to 5 years. FMG will continue to negotiate with these parties, expecting to reach satisfactory terms of settlement.
|last modified : Fri 18 Sep, 2009 [10:54]|