The prolonged dispute over time charter rates for Hunter Group vessels has continued to deepen: the amount of unpaid shortfalls claimed has exceeded $55 million after another monthly underpayment, the largest to date.
Details of the current discrepancy
An undisclosed long-term counterparty paid about $11.75 million less in August than Hunter says was due. This was the sixth consecutive month of lower payments since the dispute surfaced in March.
According to the company, the total disputed amount is now about $55.04 million including accrued interest. The shortfall trend has developed as follows:
- March — $8.31 million
- April — $9.22 million
- May — $10.37 million
- June — an increase of $7.88 million
- July — an increase of $7.19 million
- August — an increase of $11.75 million (the largest gap)
In August, Hunter recognized time-charter revenue of about $31.69 million, of which more than a third remained effectively unpaid. The company and its legal advisers maintain that the counterparty has no contractual basis to reduce payments, and that repeated underpayments are considered a breach.
Arbitration and legal basis
The dispute has already been referred to arbitration. According to an industry publication, in June Hunter already initiated proceedings at the London Maritime Arbitrators Association after the disputed amount reached $28.21 million. The procedure is being conducted in London under English law. The company seeks to recover all overdue charter hire, interest, and legal costs.
Deal background and financial results
The escalation is taking place against the backdrop of strong earnings from Hunter’s unusual VLCC trading structure. The company has two environmentally compliant VLCCs with exhaust scrubbers that were taken into charter at fixed rates and then leased out under floating contracts linked to the TD3C Middle East Gulf-China index.
Hunter pays on average $51,750 per day in charter-in fees for each of the two vessels, while retaining exposure to spot market movements through index-linked hire contracts. The structure was put in place in December 2023 and March 2024.
As rates rose this year:
- average spot charter rate in Q2: $452,922/day;
- average fixed charter-in cost: $51,750 /day;
- average margin: $401,172 /day.
As a result, in that quarter Hunter reported $73 million net time-charter revenue and $47 million net profit. In Q3, the market strengthened further: by the end of August, 61% of available ship days were booked at about $460,000 /day, in August around $547,000 /day, while the current spot rate was roughly $666,000 /day.
As of June, Hunter reported $70.3 million in cash and working capital and continued to return value to shareholders: in August the board proposed a dividend of 1.50 Norwegian kroner per share (about $0.15).
Outlook
The company stresses that its current VLCC structure is approaching completion: both vessels are expected to be returned within 12 months after April, when the three-year charter contracts expire. Against this backdrop, management has begun preparing for the next phase. It was also disclosed that former CEO Eric Friedendahl is leaving the business, and Eric Mathiesen has been appointed as interim manager pending scenario assessments after contract expiry.
GLOAPM.COM