Tanker Battle Snared In Court

Stelios Haji-Ioannou's tanker company Stelmar is poised to swoop on a fleet of modern petroleum products tankers but the deal has become ensnared by a bitter legal battle. The dispute is between the tankers' owner, First International, controlled by the high-profile shipping entrepreneur Paul Slater, and the company's financiers Berliner Bank, industry sources say. "Berliner Bank is leaning heavily on (Slater) to sign the company across to them, but the ships are mainly financed through U.S. bonds -- and the bondholders want to sell to Stelmar. They won't let Paul sign the company across to Berliner," said one industry source. "He is between a rock and a hard place." The fleet came onto the market this year when long-term charterer Shell notified First International that it would not renew a lease that had already run for seven years. First International says it was at this point that it started negotiating with Stelmar. Before the deal could be closed, however, Berliner Bank unexpectedly called in a $10 million loan to First International, saying the termination of the Shell charter put First International into default. Although First International initially challenged Berliner's move, Slater failed to attend court last week, on the advice of his solicitors. The London High Court ruled that First International had indeed defaulted under the loan agreement, because the termination of the Shell charter constituted a "material adverse change". Slater told Reuters last week that he was "very upset" by the way the dispute was going. "The equity value of the company was nearly $60 million before Berliner called in the loan, but now it's gone to nothing," he said. Stelmar, set up in 1992 by Haji-Ioannou, owner of cut price airline easyJet, said it was unable to comment. First International's Slater is head of public relations at the International Tanker Owners Federation, Intertanko, and in the last year has been actively involved in lobbying on behalf of tanker owners at the European Commission. The controversy has also scuttled a deal between Slater and German Industrial conglomerate Krupp, which is in the process of spinning off its shipping arm, sources said. "That Krupp deal was the best deal in two decades," said a source close to the company, "Paul had clinched it, but when the lenders for that deal heard that (First International) was in default, two of them pulled out." - (Reuters)