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Swan Hellenic's Second Cruise Ship Put Up for Auction due to Sanctions

Russian sanctions force auction of expedition cruise ship
Expedition cruise ship SH Vega leaving the building hall in Helsinki (photos courtesy of Helsinki Shipyard)

Published Jun 20, 2022 8:17 PM by The Maritime Executive

In the latest twist for the international sanctions against Russian entities and their impact on the shipping industry, the recently relaunched expedition cruise line Swan Hellenic is finding itself forced to bid for its newest cruise ship just weeks before its scheduled entry into service. The 10,600 gross ton SH Vega, which Helsinki Shipyard is referring to simply as Hull No 517 is being sold “as is” and “where is” with bids due by this Friday, June 24.

The SH Vega is a sister ship to the SH Minerva which was delivered to the cruise line in late 2021 as part of an effort to restart the brand which dated back to the 1950s and is considered one of the pioneers in expedition and educational travel. The sister ships, along with a third large cruise ship still under construction, were financed by the new cruise line working with Russian leasing company GTLK. The contracts call for the vessels to operate under long-term charters to Swan Hellenic.

In April 2022, however, the EU and the United States extended their sanctions against Russian entities including GTLK and its subsidiaries. Swan Hellenic was one of several shipping companies including Havila Voyages that found itself caught in the sanctions. Last week, Havila reported it had turned to the UK courts attempting to resolve its ownership problems and was able to protect its cruise ships under construction from the shipyard acting without Havila's permission. Swan Hellenic in the spring announced that it would exercise the purchase options in its contracts for the cruise ships but is still seeking court authorization to complete the acquisitions because like Havila they can not send money to a sanctioned company.

“As a consequence of the sanctions announced in April, the leasing company GTLK Europe defaulted on the payments as the per newbuilding contract of NB 517 SH Vega. Moreover, all assets belonging to GTLK should be frozen in EU,” said Swan Hellenic in a statement today reporting that GTLK will not be able to take the delivery of the ship. 

 

SH Vega completed sea trials in late May preparing for its delivery (Helsinki Shipyard)

 

Finnish shipbuilder Helsinki Shipyard a week ago released a tender notice inviting interested bidders to acquire the expedition cruise ship. “Helsinki Shipyard seeks to obtain the best fair market value for the vessel and reserves the right to reject any and all bids,” the company announced in the notice. The shipyard attests to having become the sole owner of the cruise ship reporting that it will select the winner and announce the new owner by July 1 with the delivery of the ship to be completed by July 19.

Explaining its current situation, Swan Hellenic reports that Helsinki Shipyard started the legal process of auctioning the newbuild under the terms of the shipbuilding contract. Swan Hellenic says that it is the “priority buyer” and has already submitted a bid for the ship it expects to place in service on July 20 with an Arctic cruise from Trömso, Norway. 

Swan Hellenic said “it is at an advanced stage of preparing the documents for transfer of the title on SH Vega and is ready to take full control over the vessel at the completion of the tender. Therefore, we expect there will be no change of plans in the scheduled cruises.”

Hellenic Shipyard reports that hull 517 is ready for delivery and that “upon completion of the sale and purchase, possession of the vessel shall be automatic and immediately deemed to be passed to the purchaser.” Sea trials for the vessel were completed on May 20 with Jonas Packalén, project manager for the vessel reporting that they had completed about 800 tests. Final testing was proceeding at the shipyard. 

Work is also continuing on the third cruise ship being built for Swan Hellenic. The shipyard reported that the last block for the vessel arrived in Helsinki on May 22. They plan to float out the ship named SH Diana later this summer. Delivery is expected by the end of 2022.

Swan Hellenic in May reported that they would be focusing their operation for the summer of 2022 on the SH Vega in the Arctic. The company had planned to reposition the SH Minerva after its first season in the Antarctic also to the Arctic. They however reported that renewed COVID-related restrictions required a change to itineraries and routes and that with a general softening in the travel market in part due to the situation in Ukraine they were leaving the vessel in Montevideo, Uruguay so that it would be ready for the Antarctic season in October.