Dry bulk shipowner Pioneer Marine has cancelled five handysize newbuilding contracts with China’s Yangzhou Guoyu Shipyard, and decided to delay vessel deliveries.

The termination of the five newbuilding contracts involved the 38,400-dwt handysize vessels, and instalments paid including interests will be returned by the refund guarantor.

Pankaj Khanna, ceo of Pioneer Marine, said: “The unprecedented downturn in dry bulk freight rates has prompted us to cancel another five of our newbuilding contracts at Guoyu Shipyard. This cancellation was achieved amicably through mutual consent in a negotiated settlement with the shipyard.

“The cancellation frees up $30m in cash immediately, to add to our existing cash balance of $57m as of the end of February 2016. In addition we have $24m in pre-paid instalments for the last two newbuildings. To put it simply we have $111m of cash with two newbuildings to be delivered in the next ten months.”

In addition to axing the newbuilding contracts, Pioneer Marine also agreed with the yard to delay taking delivery of two ships on order, with one now scheduled for delivery in the third quarter this year and another in the first quarter of 2017.

“We have proactively created a long runway for the company even assuming todays very low freight rates, reduced our capital expenditure commitments and have worked in the last few months to trim our costs significantly,” Khanna said.

“Post the cancellation we now have 15 vessels on the water and only two newbuildings, which have been financed with 60% debt with Sinosure cover. Pioneer is now in a strong position to take advantage of the distress in the dry bulk market either from direct asset purchases, bank deals or an M&A transaction,” he believed.