An arbitration tribunal in London has judged that a clause in a sale and leaseback agreement did not give Okeanis Eco Tankers the right to re-purchase four VLCCs it had sold to Ocean Yield
The decision to take the dispute to arbitration has its roots in the launch of an eco tanker company in 2018. Okeanis Eco Tankers was launched on the Oslo Bors in July 2018 raising US$100M in an IPO. The company was sponsored by the Alafouzos family of Greece, which operates through the private company Kyklades Maritime Corporation.
The aim of the new public company was to take advantage of the pro-scrubber sentiment ahead of IMO 2020 and operate several scrubber-equipped eco tankers ordered in the Far East by Alafouzos family associated companies. The four disputed VLCCs were part of the new Okeanis Eco Tankers’ fleet.
In February 2018, the four VLCCs Nissos Rhenia, Nissos Antiparos, Nissos Santorini, and Nissos Despotiko were sold to 100% owned subsidiaries of Ocean Yield, which had agreed to acquire the four VLCC crude tankers with 15-year bareboat charters (2034) to companies owned and guaranteed by Okeanis Marine Holdings. Each VLCC came with a five-year sub-charter to Koch Shipping of Singapore.
According to Ocean Yield, the gross purchase price was US$83.75M per vessel and the net cash purchase price was US$74.25M after a seller’s credit of US$9.50M.
Ocean Yield also announced at the time that Okeanis Marine Holdings will have certain options to acquire the vessels during the charter period, with the first purchase option exercisable after seven years.
In October 2019, Okeanis Eco Tankers Corp (OET) announced that each of the four single-purpose companies wholly owned by OET that each operated one VLCC on long-term bareboat charter from Ocean Yield had given notice to Ocean Yield requiring the sale of those four VLCCs back to the single-purpose companies for 103% of the VLCC’s cumulative outstanding lease amount, plus certain breakage fees.
Ocean Yield immediately disputed the single-purpose companies right to require such sales under the bareboat charters, disagreeing that the conditions for exercising the options had been fulfilled, and the matter was therefore referred to arbitration.
The arbitration tribunal has decided that Okeanis did not have the right to exercise such options to repurchase the VLCCs under the lease agreements.
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