Ocean Hotels Plc has reached a preliminary understanding with Davie Yards Inc. regarding the ongoing efforts to improve the yard's capitalization and to ensure delivery of Ocean Hotels' two multipurpose accommodation vessels (VS4004) on order with Davie Yards.
The agreement is subject to the completion of a total US $90 million financing of Davie Yards, which must include a capital raising in Davie, as well as the establishing of refund guarantees for future installments, a strengthening of Davie's ownership structure and a corresponding contribution from Cecon ASA. The completion of such recapitalization will, in Ocean Hotels view, ensure a stable long-term financial situation for the yard.
Ocean Hotels contribution is in the form of a cost increase of US $20 million, corresponding to approximately 9% of the total construction cost for Ocean Hotels new buildings, distributed pro-rata on the two vessels. The price increase will be allocated in three installments during the construction period where 60% will be paid upon delivery of the vessels.
The already agreed delivery times for the vessels will remain unchanged. Hull 721 will be delivered March 2, 2010 and Hull 722 will be delivered July 9, 2010.
Ocean Hotels CEO Denis Divers commented, "Our focus in this situation has been to ensure the delivery of our two ordered vessels, while providing Davie with the right incentives to ensure that a permanent refinancing solution will fall in place. Under the terms of the agreement, and upon completion of the refinancing, we are confident that Davie will be in a position to deliver the vessels according to schedule."
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