Hyundai Close To Losing Multi Ship Order

State-owned Latvian Shipping said that a $168 to $210 million order for new tankers was under threat as a result of conditions on the deal set by Latvia's privatization agency. The privatization agency's board has already approved the order for the tankers, to be built by South Korea's Hyundai Industries, but set a number of conditions that effectively postpone signing of the deal until the end of December. The agency wants to find a strategic investor for a 44 percent stake in the shipping company by December before it will sign the tanker order. Latvian Shipping is in the process of being privatized and all business decisions have to be approved by the agency's board. "We are almost sure that Hyundai will not extend the deadline for the second time," said Shipping President Andris Klavinsh. He said if that happened, the company will have to renegotiate the entire deal. The project, which the firm says is crucial for its competitiveness, is for two Panamax-type 70,000 dwt to be built immediately, with an option of four more. Latvia Shipping, one of the world's leading tanker operators, has an ageing tanker fleet and the order for new tankers is viewed as critical for its ability to compete on the market. "If we have to start anew, we won't be able to sign the deal earlier than May 2000. Ship prices grow and this project will only get more expensive," Klavins said. He added that the six ships could cost $2 to $4 million more, and the company will lose $18 million on projected revenues from the freight carried by the ship.