JES in loan row

Chinese shipbuilder JES International has been accused of defaulting on a financing agreement in a row over the value of its shares.

It took $20m from lender Lyceum Partners last year, with the option of adding another $20m.

The loan was funded through Lyceum agreeing to purchase up to 150m JES shares at an agreed discount to the fair market value (FMV).

JES was to repurchase them at a later date within three years at an agreed discount

But it has received email notification from Lyceum's lawyer alleging a default by failing to make a "maintenance fee" payment.

"The company takes the position that there is no default under the agreement," JES said.

Lyceum claims the default occurred because the FMV was less than 80% of the purchase price and that JES had failed to act on this in the stipulated time period, so it terminated the deal .

JES said it did not realise this had occurred until the expiration of the time period.

The shipyard is seeking legal advice.

It continues to seek other sources of funds and is also working with "trading companies" to secure refund guarantees and working capital to work on new ships.