Wednesday, February 2, 2000

Kvaerner says it won't have to repay Warnow yard subsidies
Saying its position is fully supported by the German authorities, the Kvaerner Group "rejects any suggestion" it may have to repay subsidies awarded in conjunction with the privatiization of the Warnow Werft in Rostock, Germany in 1992.

Kvaerner was responding to an announcement by the European Commission. The Commission is to start formal proceedings to examine whether the yard had received any excess subsidies in connection with its privatization of the yard and, if so, whether any subsidies should be repaid to the German authorities.

Kvaerner says that the German authorities "make it clear that they do not consider any excess subsidies for the privatization of the yard have been paid to Kvaerner, and further, they express their disappointment that the Commission finds it necessary to open formal proceedings in this case. "

Kvaerner acquired the yard in 1992 as part of the privatization of companies in the former East Germany.

Kvaerner says that the German authorities share its opinion that the contracts entered into, were ­ and still are - balanced with regard to the distribution of risk and reward between Treuhandanstalt, as the vendor, and Kvaerner as buyer. The contracts were presented to, and carefully examined by, the EU authorities at the time, and the EU authorities approved all payments to Kvaerner. Treuhandanstalt was the German state agency charged with privatizing companies such as Warnow Werft.

Kvaerner says that, in a statement today, the German authorities have further confirmed that Kvaerner has complied in full with all elements of the contract. The restructuring of the yard was completed in 1995, and Kvaerner has satisfied all obligations in respect of its own investments in the yard, employment, and completion of the order backlog at the time of take-over. During the restructuring period from 1992 to 1995, the EU was regularly updated on the state of development through special progress reports issued by the yard. There was no claim of non-compliance with any part of the contract made or suggested during this period.

It is expected that the formal proceedings now opened by the Commission will not be concluded until next year.

Separately, the EU Commission has ruled that in 1998, Kvaerner Warnow Werft allegedly exceeded the capacity limitations applied on the yard. Kvaerner has contested the ruling and filed an appeal with the European Court of Justice. A procedure regarding alleged over-production in 1997 is still ongoing. Kvaerner has "as a matter of prudence" provided for the total penalty anticipated for the alleged breach of the capacity limitation in 1997 and 1998 in the 1999 accounts.

Levant chooses Dex for newbuilding hull insurance
Dex, the Lloyd's based hull insurer created to "break the mold" of traditional hull insurance products, has signed up its first fleet. Dex, a joint venture between Thomas Miller, Swiss Re and Chartwell Re, claims to offer more transparent, accessible and practical products and services than traditional competitors.

In terms of claims handling and loss prevention services, Dex promises to make more use of internet capabilities than traditional insurers. Shipowners and brokers will have direct on-line access to the Dex website, wherever they are in the world. However, with a presence in more than 80 countries around the globe, Dex will provide not only an on-line but also a physical local contact.

Now Levant Maritime International SA has chosen Dex as the hull insurer for its seven new bulk carriers currently being built at Sanoyas Hishino Meisho Corporation in Japan. The policy marks Dex's first fleet since it opened for underwriting business at the beginning of this year.

Under the terms of the cover, 70% of the business will be underwritten by Dex and the remaining 30% by the London market, all under the terms of Dex's Codex2000 wording. Dex says it underwrites on an all-risks basis with clearly explained exclusions, covering hull, increased value, war and loss of income. Each package is tailored to a specific customer's requirements. Codex2000 is a new wording described as offering "comprehensive cover, modern ideas and straightforward terms."

Levant Maritime is an innovative and rapidly-expanding Piraeus-based shipowner specializing in the bulk markets. It currently owns and operates four bulk carrier s and general cargo vessels. The seven new ships in question are 51,800 DWT state-of-the-art bulk carriers with five 30 ton cranes. They are due for delivery between July 2000 and October 2001. Levant Maritime is closely associated with the Greek industrial multinational Leventis-David Group, which is active in Greece, Eastern Europe, Russia, the
Balkans, Ireland and Africa. Amongst its various activities, it is the second largest Coca-Cola bottler (after the Atlanta Coca-Cola Company) in the world.

Last year a group of investors led by Saltchuk Resources Inc. of Seattle and Levant Maritime bought the interests of Fednav Limited and Citicorp Venture Capital in Navios Corporation and its subsidiaries and affiliates.

Dex says that with the buyout (together with Saltchuk Resources) of Navios Corporation, the largest US-based ocean trader of dry bulk cargoes, Levant Maritime "will secure a coveted piece of chartering business for its pooled new fleet and create new synergies in shipping and the bulk trades. "

Dex was the natural choice for Levant Maritime, according to a company spokesman:

"For the new vessels our principals wanted a specialist hull insurer that provides top-class service in the P&I service ethos whilst also being competitively priced. Dex was the obvious choice. Codex2000 provides a straightforward, no-fuss insurance package and we are confident that the service we get will be unbeatable. Furthermore, the financial security
provided by the Swiss Re-backed Lloyd's syndicate is second to none."

Miller Insurance Group, which is not connected with Thomas Miller, was responsible for broking the deal. Miller Insurance's
Stephen Finch notes that "as brokers, we are constantly searching for reliable security offering innovative solutions to accommodate the needs of our clients. Dex offers a cost-effective hull insurance option that places emphasis on service. We at Millers are proud to be involved in securing this first fleet and look forward to further developing our relationship with the Dex team well into the future."

Dex's marketing director, Martin Bonds says it is encouraging to have attracted "brand-new vessels of such quality
as Dex's inaugural fleet and we look forward to developing a solid and practical working relationship with Levant. The fact that Levant has chosen Dex goes to show that there are responsible shipowners out there for whom product integrity and service are more important than rock-bottom rates."

While Dex aims to differentiate itself from other insurance providers by developing close relationships with shipowners, this first signing demonstrates the continued role of the broker. Dex underwriter Peter Wright comments:

"The Miller Insurance Group is a reputable broking operation whose negotiating and intermediary skills were clearly important in getting Levant the best package possible. The company was instrumental in helping Dex tailor the ideal insurance product for the seven bulk carriers."


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