Dongfang COO resigns as order book falls
Wednesday, 11 January 2012 | 11:00
Dongfang Shipbuilding chief operating officer Sun Xiaoming has resigned following a significant fall in the company's live order book.
Dongfang's trading update in November warned that the loss for the second half of the year to the end of 31 December would be materially greater than the first half as shipbuilding work had slowed dramatically.
It says that since that update,the outlook has not improved for the company's shipbuilding division.
It adds: "As market conditions have worsened, it has been increasingly difficult to secure the relevant banking finance for the execution of the contracts to allow commencement of work."
The company had an order book of approximately $64.7m at the time of the November update but the two largest contracts - totalling approximately $52.6m - have been cancelled following the failure to finalise the technical contracts and secure the required banking finance and performance bonds.
The company says it previously announced that it had signed contracts for eight 6,700DWT bulk carriers worth approximately $14.5m in total.
But it has now become clear that the customer does not intend to proceed with these contracts given the reduction in ship charter rates and the live order book has been reduced to $5.7m for delivery in July 2012.
The company adds: "Whilst the board is extremely concerned about the fall in order book and the poor state of the shipbuilding market in general, it has made progress in its discussions with its banks and should be better placed to undertake any new orders as they come in."
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