Singaporean ship financier’s bank debt prevents Wellard from taking possession of the MV Ocean Drover

A nine-year bareboat charter of the MV Ocean Drover could be the last clear run Wellard Limited has with the vessel after repurchasing attempts from Singapore-based Ruchira Ships proved to be unsuccessful.

Ruchira has reportedly been unable to pay back its loans to its bank, United Overseas Bank, which holds the vessel title and won’t release it to Wellard, which has paid for the Drover in full with “no further expenses” anticipated.

Under the bareback charter, Wellard is able to operate the vessel without restrictions until the vessel is reconveyed — which it has been doing from South America to Turkey under charter contract from Brazil, with ongoing commitments scheduled for the rest of the year.

In June 2022, Wellard reported its bareboat charter for the Drover would be extended until June 30, 2032, with a US$2.84 million price tag (which also included a similar charter for its MV Ocean Ute vessel).

Wellard was expected to take possession of the Drover on June 30 under a memorandum of understanding between the parties, but after some negotiations it granted an extension for re-delivery of the vessel to August 4, which was again pushed out to Friday, September 1.

Wellard executive chairman John Klepec said Ruchira must deliver unencumbered title to the vessel, “but has been unable to make appropriate arrangements with its bank, UOB, to provide the required discharges of mortgages registered against the Drover”.

Mr Klepec said the company has various options available to it should the Drover not be reconveyed by the expected date.

“Any course of action is speculative at this stage, with possible outcomes including damages and/or specific performance,” Mr Klepec said.

“It is also possible that Wellard may not regain full legal title to the Drover.”

He said because there were no further payments to be made to Ruchira, Wellard’s “remaining nine-year right to operate the ship under the bareboat charter is at no charter cost to Wellard”.

He said the company experienced similar issues with the reconveyance of the MV Ocean Ute 18 months ago.

Wellard underwent a debt restructuring program in 2019 that involved selling the MV Ocean Shearer, the largest purpose-built livestock vessel in the world, for about $77.8m to Livestock Transport and Trading Co, Kuwait, a company controlled by Al Mawashi Limited, which is the largest exporter of sheep from Australia to the Middle East.

In 2019 it also sold the MV Ocean Swagman for US$22m to Heytesbury Singapore Pte Ltd, a 15 per cent shareholder in Wellard, and leased it back — currently on a time charter arrangement.

The company’s restructuring also included the April 2019 sale of its Wongan Hills feed mill and Baldivis Pre-Export Quarantine lease on a going-concern basis to Ausvision Rural Services, a subsidiary of Livestock Shipping Services.

Wellard is expected to release its end of financial year report on Tuesday, August 29.