05/01/2022 - 15:52

Wellard lifted on arbitration win

05/01/2022 - 15:52

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Shares in Fremantle-based agribusiness Wellard were up as much as 37 per cent on news it could receive up to $16.5 million following a three-year contract dispute.

Wellard lifted on arbitration win
Photo: Attila Csaszar

Shares in Fremantle-based agribusiness Wellard were up as much as 37 per cent on news it could receive up to $16.5 million following a three-year contract dispute.

Wellard announced in August that its Singaporean subsidiary Wellard Ships had succeeded in arbitration proceedings in the UK against Croatian shipbuilding company, Uljanik.

The company had sought a refund regarding a shipbuilding contract struck with Uljanik that was terminated in 2018 after the Croatian business went into interim receivership.

But recovery of the costs was uncertain, given the company was in liquidation when the arbitration was won.

In its most recent annual report, Wellard advised that it was using the first arbitration award to claim a refund of advance payments and interest to start a second arbitration against the Croatian Bank for Reconstruction and Development.

Refunds under the original shipbuilding contract were separately secured by two Bank Refund Guarantees issued by the bank.

Today, Wellard informed the market it had successfully resolved the second round of proceedings and is now entitled to receive payments plus interest to the tune of $US12 million ($A16.5 million).

Wellard executive chair John Klepec said the company was pleased to recover the funds.

“This is a fair and appropriate outcome in the circumstances, demonstrating the importance of effective risk mitigation that refund guarantees provide in the ship building industry,” he said in a statement.

“The Wellard board will consider the most appropriate application of the funds and make any requisite announcement in due course.”

According to Wellard, payment must be made within 14 days.

Wellard shares closed the day up 37.36 per cent to trade at 12 cents.

 

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