Insure your car, home and valuables with iWYZE
THE Panos Earth has been sold by judicial auction to a Chinese company for $2.71 million (about R22.3m) – three months to the day after it was towed into False Bay with engine trouble.
The ship had a reserve price of $1.973 250m and was sold for less than it was worth, but members of the shipping fraternity said this was to be expected in a “fire sale”.
The new owners, Dragon Carriers of China, were represented by Zhou Yi, one of only two bidders in a room of more than 40 people who had come to watch the auction. Some were simply curious, others were creditors eager to find out how much of their bills were likely to be paid.
The other bidder was Abhishek Khullar from Mumbai, representing a company wanting to buy the ship for “a decent burial” in an Indian scrapyard.
Bidding began slowly and the Chinese party went to $2.55m and India to $2.7m. The Chinese company won by raising its bid to $2.71m.
Afterwards, Zhou said his company would have to discuss the best options for dealing with the Panos Earth.
The previous owners, Pacific Bulk Carriers from Chile, ran out of money and were unable to repair the engines. The estimated cost of repairing the engines is $750 000.
The options are to repair the vessel, or sell it for scrap.
If the new owners decide to repair it, the company must decide whether to do so in False Bay, which would be costly as a salvage tug would have to be on standby, or to tow the ship to a bigger port, such as Coega, for repairs.
Now that the vessel has been sold “free of encumbrances”, local port captains are more likely to allow it to dock, knowing it is unlikely to become a liability.
It is too big to come into Cape Town Harbour.
The sale included the cargo of iron ore, which has to be delivered to its owners in China.
South Africa can load iron ore on to ships, but has no facilities for taking it off. The only way to do so would be to discharge it on to another ship. This would cost $5.5m (R45.2m) if done in a port and $7.5m (R62.7m) if done in False Bay.
Maritime lawyer Ed Greiner, who acted for the salvors Smit Amandla Marine and Smit Marine SA, said the costs the ship had incurred while in False Bay exceeded the auction price.
Smit, the biggest creditor, went to court this month to get an order to allow the ship to be sold by judicial auction.
“With old ships like this, they’re close to scrap price, and the world market in scrap is collapsing. One and a half months ago the scrap price for the ship was $6m (R49.3m), now it is $4.2m (R34.5m),” Greiner said.
He said the Admiralty Jurisdiction Regulations Act set out how claims had to be ranked when paying creditors.
“Certain people will be paid in full, certain people will be paid pro rata, and certain people will not be paid at all.”