Zim Integrated Shipping Services Ltd. will pay Taiwanese shipbuilder CSBC Corporation $28.9 million in compensation for cancelling an order for the building of six ships. Zim canceled the order because of the crisis in the global shipping industry.
18 months ago, Zim ordered four ships from CSBC with an option for two more at a cost of $36.75 million per ship, for a total of $220 million. Deliveries were scheduled for 2010-11.
Under a deal between Zim Integrated Shipping Services Ltd. and sister company Ofer Shipping Holdings Ltd., Zim transferred its rights and obligations in the CSBC contract to Ofer Shipping, and signed a 12-year lease contract for the ships at a cost of $17,500 per day per ship. Ofer Holdings Group owns Ofer Shipping directly and controls Zim through Israel Corporation (TASE: ILCO).
Zim will bear most of the cost of the compensation payment to CSBC. The contract included a $38.6 million cancellation clause, amounting to 17.5% of the total amount of the contract. Zim is paying 75% of this amount, or $28.9 million, and Ofer Shipping is paying the $9.6 million balance.
Published by Globes [online], Israel business news - www.globes-online.com - on May 4, 2009
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