Havila and Swan Hellenic Wait for Ireland to Free Ships from Sanctions
Cruise lines Havila Kystruten and Swan Hellenic are waiting for actions from the Irish courts and the Central Bank of Ireland to free their cruise ships that have been caught for nearly a year in the financial sanctions imposed by the European Union against Russia and its financial institutions. Both cruise lines announced further cruise cancelations saying they are confident that the matter will finally be resolved in a matter of days.
The lines were building ships that they had financed by working with a well-known Russian firm GTLK. They were using similar deals where subsidiaries of RTLK financed the construction of the ships and would own them while they were operating under long-term charters to the cruise lines. The problems began in April 2022 after the EU sanctions were extended to GTLK and both lines began scrambling to free their ships from the unintended consequences.
Havila was forced to lay up its first cruise ship the 15,500 gross ton Havila Capella and cancel Norwegian coastal voyages until late June 2022 before it was able to make arrangements with the Norwegian authorities and its insurance companies. The company took delivery on its second cruise ship, Havila Castor with bridge financing from the shipyard but was forced at the end of the year to delay delivery of Havila Polaris from the shipyard while it worked to resolve the issues to purchase the ship. A fourth ship, Havila Pollux is still under construction at the Tersan shipyard in Turkey.
Swan Hellenic reported that it exercised the purchase option under its contract with GTLK for the SH Minerva, but the company was forced to lay the 10,600 gross ton ship up in April 2022 in Uruguay while it waiting on the courts for a resolution. The company’s plans to reactive the SH Minera on February 7 for a 31-day cruise to Antarctica have now been canceled.
After months of negotiations, Swan Hellenic reports its legal firm identified a solution by having Swan Hellenic acquire the GTLK subsidiary that owns the cruise ship. An application was made weeks ago the company reports to the Central Bank of Ireland for a license, which they expect will be granted in the next two to three weeks. The timing was more favorable for the company’s other two cruise ships which were still under construction at Helsinki Shipyard and as such GTLK could be declared in default and Swan Hellenic buy the ships through a tender offer conducted by the shipyard.
“Neither our financing partners nor we want to end up in a legal dispute,” said Bent Martini, managing director of Havila explaining the delay in the delivery of Havila Polaris. Like Swan Hellenic, Havila is waiting for its license from the Irish Central Bank to proceed with a resolution that will result in the refinancing of the three cruise ships.
Havila won a decision from the High Court of England in Wales in December 2022 to permit it to purchase the cruise ships by making payment to a frozen bank account that GTLK will have access to once the sanctions are lifted. Havila then went to the Irish High Court in Dublin seeking an order recognizing the UK court order and then to the Central Bank for the license. A separate action is planned in the Irish courts to resolve the ownership of the Havila Capella.
Havila last week announced it was postponing the maiden voyage of the Havila Polaris canceling planned sailings from Bergen on February 11 and 22. The cruise ship is still at the shipyard in Turkey and Havila now plans to start its operations on the Norwegian coast on March 5. The Havila Castor and Havila Capella have continued to operate their coastal voyages while the courts sort out the ownership issues.
“The fact that we have now decided to postpone sailings on Havila Polaris is naturally very regrettable for our customers, partners, the Norwegian authorities with whom we have an agreement, the coastal communities, and employees. At the same time, this has always been a situation beyond our control, for which we now, fortunately, see a solution,” said Martini.
Havila reported on January 25, that it expects to receive the needed license from the Irish central bank in the next 10 working days. At the same time, the company reports strong demand for its coastal voyages saying it has already sold 50 percent of capacity for 2023.