Havila Kystruten AS

Legal Proceedings Report • Jun 16, 2022

Havila Kystruten AS: The company has taken legal action to become owner of Havila Capella and securing its interests in the ships under construction

Havila Kystruten AS: The company has taken legal action to become owner of Havila Capella and securing its interests in the ships under construction

Havila Kystruten has taken legal action to become the owner of Havila Capella

that has been out of operations since 12(th) April caused by insurance

companies' termination of the ship insurances.

Havila Capella was delivered from Tersan shipyard to Havila Kystruten on 3(rd)

November 2021 and started to sail on the coastal route between Bergen and

Kirkenes on the 12(th) December 2021.

The long-term financing for the ship is a financial lease where the

documentation provides that Havila Kystruten is fully responsible for the

operation as it would have been if the ship was wholly owned by the company.

Havila Kystruten has a purchase option two years after delivery and a purchase

obligation at the end of the contract period with the Ministry of Transport.

The leasing company is a company registered in Hong Kong and owned by the

Russian company GTLK.

Havila Capella is booked in the accounts of Havila Kystruten AS as a Norwegian

property and is taxed in Norway as a Norwegian ship.  The ship sails under the

Norwegian ordinary ship registry (NOR) and the seafarers on board have Norwegian

conditions for wages and social security arrangements.

The leasing company was, on the 8(th) April 2022, by EU, added on the list of

sanctioned companies as a result of Russia's warfare in Ukraine.

Despite that the payment obligation under the financial lease arrangement being

unaffected by whether the ship is in operation or not, the ship's insurances

were cancelled by the insurance companies following the sanctions.  Havila

Capella has been out of operations since 12(th) April 2022.

Havila Kystruten has been in continuous dialog with several ministries in the

Norwegian government, to find a temporary solution, allowing operation of the

ship along the coast under the assigned contract with the Ministry of

Transport.  So far, no political acceptance to operate Havila Capella has been

achieved.

In parallel Havila Kystruten has had an ongoing dialog with the management of

GTLK to search for an amicable solution or agreement where Havila Kystruten

again could obtain insurance coverage for the relevant risk exposures that

operation of the ship imposes.

The loan documentation in place, and which establishes rights and obligations

under the financial lease arrangement, is regulated by English law.  Havila

Kystruten has therefore in co-operation with Norwegian and English lawyers,

taken required legal actions to ensure the transfer of legal title and the

formal ownership of Havila Capella to the Company, by legally redemption of the

debt to GTLK, where all restrictions following the sanctions are safeguarded.

Particular of Claims was filed on the 15 June 2022 with the Business and

Property Courts of England and Wales, and declarations are sought that there has

been no default by the charterer under the bareboat charter and that payment of

the termination sum to a frozen bank account is good discharge of the

charterers' obligation under the bareboat charter.  By payment of the

termination amount to the frozen bank account, transfer of title to the Vessel

should be registered in the name of Company. The court hearing has not yet been

scheduled, but is expected in the near future.

Redemption of current debt to the leasing company depends on successful

refinancing of the ships delivered and the ships under construction for delivery

later this year.

The legal actions also includes measures to protect the interests of the Company

in the two ships which are still under construction at Tersan Shipyard.  An

injunction has been granted by the High Court of England and Wales on 15(th)

June 2022 stating that no transaction can be carried out or undertaken in

respect of the two vessels under construction without the prior approval of

Havila Kystruten AS.  A subsequent hearing in the court is scheduled to 24(th)

June 2022.

A subpoena has also been filed in Norway for a temporary injunction to grant

full control over Havila Capella so the ship can be insured in the name of

Havila Kystruten AS.

Contacts:

CEO Bent Martini, + 47 905 99 650

CFO Arne Johan Dale, +47 909 87 706