Tuesday, February 29, 2000

MarAd takes over Massachusetts yard
Security guards acting for the U.S. Maritime Administration are now in control of the premises of the the former Fore River Shipyard in Quincy, Mass. The action came after MarAd, last Friday, satisfied a $59 million demand for payment on government-guaranteed financing related to the renovation of the yard.

Fleet Bank demanded payment after the shipyard owner, Massachusetts Heavy Industries, Inc., failed to meet extended deadlines for principal and interest payments on the guaranteed loan.

The payment to Fleet totaled $59,071,657.60 which includes outstanding principal and accrued interest owed to Fleet by MHI under the financing guaranteed under Marad's federal ship financing (Title XI) program.

At the request of both Fleet and MHI, MarAd previously had extended deadlines for delayed principal and interest payments until Feb. 25.

While the $59 million payout may be seen as a blow to the Title XI program, Marad came under heavy political pressure from Massachusetts local interests to make this particular guarantee. It provided it only after receiving specific authorization from Congress in 1996.

When MarAd issued a letter of commitment for Title XI guarantees of the shipyard modernization project, back in November 1, 1996 it contained a number of provisions to protect the interests of the U.s. Government. These
included requiring the State of Massachusetts to deposit $6.6 million to be held in a financing account.

The agency said its immediate priority is to protect the equipment, buildings and other assets on the site. It said it will continue to consult with interested parties as it works to fulfill its fiduciary obligations.

Deputy Maritime Administrator John E. Graykowski said: "Ultimately, we had no alternative to acting now to fulfill our obligations to the nation's taxpayers. As we assess the situation in the days and weeks ahead, we will
continue to consult with the people of Quincy and of the Commonwealth about appropriate actions and future possibilities."

Kvaerner signs $ 1.1 billion letter of intent with Royal Caribbean for two more Eagles
Kvaerner, today announced that it has signed a letter of intent with Royal Caribbean Cruises to build the fourth and fifth Eagle-class vessels for Royal Caribbean International. The total contract price for the, as yet, unnamed cruise ships, is in excess of US$ 1.1 billion. Both vessels are to be built by Kvaerner Masa-Yards at its Turku Shipyard in Finland, for delivery in 2002 and 2003, respectively.

The letter of intent is subject to conditions that including financing by the yard. Kjell E Almskog, Kvaerner's President & CEO said: "Whilst Kvaerner has decided to focus its strategic interests in areas other than Shipbuilding - and the process of seeking a new ownership structure for Kvaerner Masa-Yards is now progressing - we welcome this agreement with RCCL. "

"The Eagle-class ships, the largest passenger ships afloat, are a source of pride for us," he declared. He said the agreement would take the Masa-Yards backlog from six ships and $1.3 billion to eight ships and $ 2.4 billion. This would securie the future of the yard "well into the current decade, irrespective of its ownership structure."

The first of the Eagle-class series, the 3,114-passenger, 142,000 ton, Voyager of the Seas, was delivered by Masa-Yards in November 1999. Two sister shipsare currently under construction at Masa-Yards for delivery in 2000, and 2001, respectively.

P&O inks deal with MHI for Princess mega ships
P&O has now signed a contract with Mitsubishi Heavy Industries Ltd (MHI) for the construction of two 113,000 gt cruise ships. These are the largest cruise ships ever ordered by the P&O Group and the first to be ordered from MHI.

The ships are for the Princess Cruises fleet and are due for delivery in July 2003 and May 2004 respectively. They are part of an expansion programme that will double the size of the Princess fleet over the next five years and will support the expansion of Princess into the Caribbean.

The ships will have a combined diesel and gas turbine electric power system that will enable better space utiliization with the gas turbine being installed in the stack area, thereby enabling an even wider range of public rooms and on board facilities to be introduced.

The power system will feature:

  • 4 medium speed diesel engine driven alternators and 1 gas turbine driven alternator.
  • Gas turbine situated in the stack
  • 3 bow and 3 stern thrusters for good manoeuvrability.

Lord Sterling, Chairman of P&O, who was present for the contract signature, said: "Although this is the first time that our cruise ships will have been built by Mitsubishi it cements a long standing relationship that P&O has with the company. MHI is one of the most technically advanced yards in the world and we have every confidence that

The two ships form part of a six ship order program for Princess, first announced on 22 June 1999. They will be built in MHI's Nagasaki shipyard.
rates for 660 days during a five- year period.

$230 million LMSR contract for NASSCO
General Dynamics' National Steel and Shipbuilding Co., San Diego, has been awarded a $230 million contract to build its eighth Large Medium Speed Roll-on/Roll-off (LMSR) ship under the U.S. Navy's Strategic Sealift Program.

The contract completes the 20-ship LMSR program, which NASSCO has shared with other American shipbuilders.

NASSCO has now won contracts for eleven of the vessels, three conversions and eight new construction. This latest contract will keep approximately 1,000 NASSCO workers, as well as hundreds more in supplier companies, employed over its life. Constructionwill commence this summer with delivery of the ship scheduled in mid-2002.

The new construction strategic sealift ships are assigned to the U.S. Navy's Military Sealift Command, carrying U.S. Army combat equipment, vehicles and supplies near potential areas of conflict around the world. The ships also provide surge sealift support of remote military actions. Their multi-use capabilities make these cargo ships among the most flexible ever built. The ships are 950 feet in lengthand contain 390,000 square feet of cargo carrying space. All ships are being named for U.S. Army Medal of Honor recipients.

Sedco Express contract modified
Transocean Sedco Forex Inc. announced that one of its operating subsidiaries has reached an agreement with Elf Exploration Angola (Elf) to amend the offshore drilling contract on the newbuild semisubmersible Sedco Express. Modifications to the contract pertain primarily to the date for possible early termination due to late delivery of the rig and total expected revenues over the duration of the contract.

The date for possible termination of the contract due to late delivery of the rig has been extended from May 28, 2000 to December 28, 2000. The company currently expects delivery of the rig to Elf on or around the middle of 2000.

The total expected revenues to be generated over the firm three-year term of the contract have been reduced by $23 million to an estimated $165 million. In addition, the amended contract allows Transocean Sedco Forex to recover a maximum of $3.7 million of the revenue reduction during the initial six-months of the rig's operation through the achievement of minimum monthly performance goals. Also, the company can earn additional revenues during the term of the contract through a performance-based bonus program.

The dynamically positioned Sedco Express is one of three newbuild Sedco Express-class semisubmersibles currently under construction by Transocean Sedco Forex Inc. The high specification semisubmersible, which is capable of ultra-deepwater operations in up to 7,500 feet of water, possesses streamlined logistics, extensive mechanization and parallel tubular handling operations, which contribute to improving overall well construction time by an estimated 25%. The rig is currently undergoing thruster installation off the coast of Brest, France and has begun its final shipyard commissioning and equipment testing. The rig's initial drilling assignment is expected to be off the coast of Angola.


First ICO satellite set for launch
ICO Global Communicationssays that the first in its series of global communications satellites is scheduled for launch aboard a Sea Launch vehicle on March 12.

A 200-foot Sea Launch rocket will lift the 6,000 lb ICO F-1 mobile communications satellite, built by Hughes Space & Communications Company, into middle Earth orbit (MEO) from a site at 154 degrees west longitude at the equator, about 200 nautical miles east of Christmas Island in the Pacific Ocean.

The launch window opens at 7:49 a.m. Pacific Standard Time (3:49 p.m. London time) March 12.

"The launch of ICO's first satellite will represent a tangible milestone for our employees, our vendors and our company, which has undergone a transformation over the past six months," said Richard Greco, ICO's chief executive officer. "With the recent progress we have made in our financial restructuring led by Craig McCaw, ICO is now focusing on the business of building a system that will offer seamless, high-quality communications services to customers worldwide. The upcoming launch of ICO F-1 is an important first step toward making this dream a reality."

Last weekend , both the Sea Launch Commander, a floating mission control center and rocket assembly factory, and the Odyssey, a self-propelled launch platform, departed the Sea Launch Home Port in Long Beach, Calif. The Sea Launch Zenit-3SL rocket that will deliver the ICO F-1 satellite into space sits in an environmentally controlled hangar onboard the Odyssey. Transit of both vessels from Long Beach to the equator was expected to take about 11 days.

On arrival at the launch site, the Odyssey will be partially submerged for additional stability. The Sea Launch rocket will then be withdrawn from its hangar, lifted into a vertical position, fueled with kerosene and liquid oxygen, and launched via remote control from the Sea Launch Commander. Prior to the start of the automated fueling process, the Odyssey crew will be transferred to the Sea Launch Commander and transported approximately six kilometers away.

In October 1999, telecommunications pioneer Craig McCaw and his affiliates, Teledesic and Eagle River Investments LLC, agreed to lead a group of investors that will provide up to $1.2 billion to ICO to enable the company to emerge from bankruptcy. On Feb. 4, McCaw, Teledesic and Eagle River completed a definitive agreement to proceed, and initiated a $275 million second round investment in ICO.

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