It's impossible to know what were the conditions of the charter party - I am sure nothing allows for this. It might be the contracts allowed for early return with penalties, and maybe the charterers told Excel I'll keep your ship, but only at market rates.
That's just a guess on my part.
Anyway, it's affecting Excel Maritime Carriers financial situation, and they won't be paying dividends.
I expect we will see this in all of the dry bulk sector.
Those idiots should have suspended dividends long before this, but that's another story.
From Lloyds List
Contract defaults force Excel to axe dividends
Toby Anderson - Tuesday 17 February 2009
DRY bulk carrier Excel has axed its dividend payments after unveiling potential losses of over $100m thanks to charter hire contract defaults.
The Stamatis Molaris-led company today revealed that two of its clients are refusing to pay agreed charter rates for ships they are already contracted and that other charterers have already approached the company in order to renegotiate charter rates.
In a stark warning submitted to the New York Stock Exchange, Excel admitted that it could no longer “assure that charterers will continue to pay hire at agreed rates, reduced rates, or at all”.
As a result the operator suspended company dividends, citing “challenging conditions in the freight market”.
“Two charterers, with long-term charters on three of the company’s vessels, have recently unilaterally started to pay approximately 50% of the agreed charter rate to the company,” Excel explained in a statement.
The company did not disclose which of its vessels were affected.
Excel said the financial implications of the loss of hire, should the company keep receiving the reduced rates, will be about approximately $107m, of which $32m would affect 2009 cash flows and $35m would affect 2010 cash flows.
The company will “carefully evaluate all its alternatives, including the full enforcement of its legal rights.”
In view of the charter disruptions, Excel’s board said that it would be suspending dividends, beginning with the fourth quarter payment for 2008.
The company said the decision was aimed at preserving cash and “enhancing liquidity, and is considered to be a precautionary measure in view of the disruptions arising with some of thecompany’s charters”.
While the dividend policy will be “regularly assessed by the Board of Directors” it will ultimately depend, among other things, on the Company’s obligations, leverage, liquidity and capital resources.
The Company said today it would also consider “other means of enhancing liquidity and strengthening its capital base.”
