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. Last Updated: 07/27/2016

Ship Seized By EBRD in Loan Feud

The European Bank for Reconstruction and Development has seized a ship belonging to the Sakhalin Shipping Co. in a dispute over the repayment of $30 million, SASCO first vice president Arkady Kukin said Thursday.

The feud is over a $42 million loan that SASCO won from the EBRD and other lenders in 1996 for the purchase of eight vessels. The ships and eight more vessels were used as a collateral for the loan, but the market value of each vessel has fallen from about $7 million each to $3.5 million, putting the loan in technical default.

SASCO, which has returned $14 million of the 10-year loan, is ahead on payments, Kukin said. Furthermore, the company has sunk $19 million of its own funds into the project and secured the entire holding as the loan collateral.

But the EBRD is requesting that Seascot, which operates the 16 collateralized vessels, sell the eight ships bought with the $42 million loan, Kukin said.

Some of the 16 ships have already been sold, officials said.

SASCO lashed back last month and told their ships to return to port in the far eastern island of Sakhalin from their operations in Latin America, Africa and the Mediterranean, Kukin said.

Roll-on-roll-off vessel Shantar was arrested in Hong Kong on Wednesday and the crew was changed at EBRD's request.

"We will sue the EBRD," Kukin said. "Our ships operate more efficiently than those managed by Seascot."

"The project itself is not economic and the security position is not at all satisfactory," EBRD official Charles Wrangham said from London. "We are interested in finding a constructive agreement with SASCO."

SASCO, a sprawling shipping company with 42 subsidiaries, is 25.5 percent owned by the government, and 14 percent is held by foreigners. Individuals own the rest of the shares. The company currently owns 32 vessels.