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Transman order failure scrutinised for signs of things to come Dated : 16-11-2007

Greek owner Transman Shipping Enterprises confirms it was about to sign an order for one optional and three firm 4,250-teu ships at Samsung Heavy Industries but says the deal stalled on chartering arrangements.
Transman managing director Markos Barlas denies market speculation that the deal failed at the last minute after it was turned down by a German bank for financing.
"We did not get a sufficient charter rate to get the ships," Barlas said, adding that the project's failure had nothing to do with financing and that there was no German bank involved. He says Transman mostly does business with the Royal Bank of Scotland (RBS), while other market sources say it also uses Greek banks.
TradeWinds understands that Transman and Taiwanese line Yang Ming were unable to reach an agreement over 15-year charter rates for the ships, which would have been delivered in 2010 and 2011.
The collapse of deal over charter disagreements would not be unusual but some financial sources still believe the failure may stem partly from the view that the market is weakening - either because of the cost of financing or a need to secure higher charter rates to cover borrowings.
As many as 15 to 20 ships in various newbuilding deals are thought to be coming up as potential resale candidates as a result of the German credit squeeze. Most are said to be supramax bulkers and boxships.
Market commentators do not believe Transman's contract at Samsung flopped because of the owner's risk exposure to shipping but some add that it will get harder for smaller owners to get credit than larger blue-chip outfits.
Athens-based Transman has four boxships - a 30-year-old, 300-teu feeder, a 2,000-teu ship and 3,000-teu ship built in the 1980s and a 1,600-teu unit built in 1995, according to AXS-Alphaliner.
Barlas says the company has not turned its back on the newbuilding project, adding that it is now a question of finding new slots and reaching an agreement with charterers over the numbers.
However, some shipping banks in Germany have put a cap on lending, are slowing activity or are reducing the size of loans. The trend may spread with the affects of the US credit-crunch.
Shipbuilding sources say newbuilding activity may not slow down because genuine buyers are still interested in ordering vessels but they add that owners may have to pay more cash upfront than the previous practice of just 5% to 10%.
Irene Ang,Yiota Gousas and Paul Berrill Singapore, Athens and London, published: 16 November 2007
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