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RUSSIAN BANANA DANCE — KEKHMAN PAYS THE TICKET

By John Helmer, Moscow

Vladimir Kekhman, owner of the Joint Fruit Company (JFC), the near-monopoly supplier of bananas to the Russian market, has wound up his dispute with Star Reefers, the banana boat supplier whose charter contracts JFC cut short and terminated in 2010. The Star boats were operated by JFC to ship bananas from JFC-owned plantations in Ecuador to St. Petersburg, dropping smaller banana cargoes for sale at ports along the way.

The dispute over those contracts resulted in more than a year of litigation in the UK High Court, and an award to Star of $16.3 million in damages and costs, plus interest. When JFC failed to pay that by the November 2011 deadline, Star got the High Court to issue asset disclosure and freeze orders against Kekhman and his associates all over the world. This imperilled not only Russia’s banana traffic, but also Kekhman’s other line of business, the Mikhailovsky theatre and ballet company; the latter has been scheduled to perform in London and New York in a few weeks’ time. Both bananas and ballerinas now appear to be safe from seizure.

The negotiations between Kekhman and Star were confidential, and their outcome last week more or less so. Star has issued the following announcement: “The Board of Star Reefers has sold or decided to sell six of its smaller and less efficient vessels; Viking Star, Argentina Star, Brasil Star, Honduras Star, Valparaiso Star and Tauranga Star, for scrapping.

Additionally the Company has achieved a satisfactory solution to its dispute in respect of the JFC Group. The terms of the agreement are confidential. The transactions will have an aggregate positive effect of approximately USD6 million. Proceeds received will be used partly to prepay debt and for general working capital purposes.”

Simon Stevens, the chief executive of Star, is quoted in the announcement as adding a pat on the back for Kekhman. “All parties have worked hard to achieve this and I am pleased we have found a constructive and amicable solution.” There has been no disclosure [1] of how much the agreement will cost Kekhman’s pocket, and what impact this deal will have on JFC’s pending bankruptcy proceeding in a St. Petersburg court.

Russian shipping experts estimate the book loss for Star on the 10 to 13-year old vessels sent to the scrap yard amounts to between $2 million to $3 million per vessel.

If true, and if Star will net “an aggregate positive effect” of $6 million, that suggests Kekhman and JFC have paid up at least the full amount ordered by the High Court in August of 2011 [2].

That leaves the last dance to the greatest banana dancer of them all. Here [3], for free, is Josephine Baker at the Folies Bergere in 1927.