Tuesday, July 18, 2000

Liberian registry to offer recording of mortgages in London

Shipowners will, for the first time, be able to record Liberian mortgages in London, beginning later this year. Jill Keohane, vice-president corporate of the Liberian International Ship & Corporate Registry (LISCR), says "This is a service which has real value to owners, in saving both time and legal fees. "

"London is a major shipping center and it sits in the time zone that bridges the Far East and the U.S. There is a lot of demand for the recording of mortgages to be available there. We can use secure technology which will allow us to maintain the mortgage register in the U.S., but inspect and close it from London when our clients need to. That will generate legal cost savings of many thousands of dollars per vessel, besides making the process simpler."

Nick Sherriff, a director of Frontline (U.K.) Ltd, which has recently flagged three VLCCs into the Liberian Registry, welcomes the opportunity to register mortgages in London. "It will save us a lot in legal fees," he says.

The recording of mortgages in London is the first step in a Liberian Registry program designed to take registry services to clients. Over the next year, LISCR will be announcing a number of new services aimed at saving shipowners time and money.

End of a cross-Channel era
Sea Containers Ltd.'s subsidiary Hoverspeed Ltd. says it will "reluctantly have to withdraw" its two 32 year old hovercraft on the Dover to Calais route and replace them with two SeaCats that have 50% more capacity. Crossing times will not be significantly changed in that the hovercraft take 35 minutes while the SeaCats take 45 minutes.

James B. Sherwood, president of Sea Containers Ltd., said two factors have dictated the decision. Since the loss of on-board duty free sales more people are taking their cars to France to buy larger quantities of goods at the same prices available there ashore as the former on-board duty free prices. The hovercraft does not have sufficient car capacity to meet this demand.

Sherwood also said that travelers would benefit from the equipment changes in that the SeaCats are more spacious and comfortable, the windows are not obscured by spray so passengers can enjoy the visual experience much better, and there is a bar-cafe and shops where French-priced goods can be purchased when the ships are in French waters.

Frontline ups Golden Ocean stake
The board of Frontline has issued 68,700 new shares in Frontline to purchase $5 million of Golden Ocean Bonds. Shares were used as payment for the bonds due to the seller's preference to have a continued interest in the tanker market.

Based on the closing price at Oslo Stock Exchange on July 17 of NOK 108 and an exchange rate of NOK 8.73/US$1 the payment equals 17 % of face value, which is in line with the offer Frontline has given for the restructuring of Golden Ocean.

Frontline and its affiliates now own own $109.5 million, or 38 %, of Golden Ocean's $291 million bond issue.

The Frontline Board will consider using the same mechanism in future to further increase its holding of Golden Ocean Bonds.

Total number of shares in Frontline after completion of this issue is 78,838,060.

Diamond Offshore will deliver Ocean Confidence to BP Amoco late
Diamond Offshore Drilling, Inc. says an agreement has been reached with a subsidiary of BP Amoco (BP) which provides for a modification to the contract covering the Ocean Confidence. The modification provides for an extension of the delivery date from July 1 to December 1 of 2000.

This extension will allow Diamond Offshore additional time to complete and test the rig for performance in waters up to 7,500 ft . Diamond Offshore will accrue a penalty based upon the delivery date of the rig and has agreed to accrue an additional obligation to BP for certain types of downtime which could occur during the first two wells of the drilling contract. These accruals would incrementally reduce revenue payments from BP to Diamond Offshore during the five-year contract term of the Ocean Confidence.

The company currently expects the Ocean Confidence to be delivered by September 30, 2000. Based upon the expected delivery date, future revenue would be reduced by approximately $3.6 million. Should the delivery occur on December 1, 2000, the maximum such reduction wouldbe approximately $6.1 million.

The Ocean Confidence, originally built by Mitsui in 1988 is a dynamically positionedf enhanced Aker H3.2 design semisubmersible. It is currently located at Friede Goldman Halter's Sabine Pass, Texas, yard.


NNS reports increased earnings
Newport News Shipbuilding today reported net earnings of $24 million, or $0.74 per diluted share, for the second quarter of 2000. EBIT for the quarter was $54 million, up from an adjusted $47 million in last year's second quarter.

"The second quarter results represent a continuation of the successful track record we've established," commented Chairman and Chief Executive Officer William P. Fricks. "This marks the tenth consecutive quarter the Company has reported substantial EPS growth, building on our commitment to deliver consistent and improving financial performance."

Newport News posted second quarter revenues of $532 million versus $444 million in the same period in 1999, reflecting gains in all business segments. The Construction segment led the advance as revenues climbed to $227 million from $164 million. Increased construction work on the aircraft carrier Ronald Reagan and the Virginia-class submarines, coupled with advanced procurement on CVN 77, accounted for the higher volume. Additionally, Engineering revenues of $80 million reflected a $19 million gain over last year as this segment benefited from design work on a new propulsion plant for the next class of aircraft carriers.

EBIT in the quarter rose to $54 million from an adjusted $47 million in the second quarter of 1999. Volume gains across all segments and higher margins in Fleet Services drove the improvement. The higher margins in Fleet Services, and continued strength in the Construction segment, contributed to the Company achieving operating margins in excess of 10% for the sixth straight quarter.

Free cash flow for the quarter of $13 million brought year-to-date cash flow to $77 million. The second quarter free cash flow reflected the payment of over $60 million in interest and taxes. The Company also repurchased 850 thousand shares of its stock during the quarter, bringing year-to-date repurchases to more than two million shares at a cost of approximately $61 million.

Pod problem plagues Paradise
Carnival reportedly halted a week-long cruise on its smoke-free Paradise when it was just hours out to sea on Sunday. The ship returned to Miami with a technical problem with one of its two Azipod propulsion units and Carnival also canceled its next cruise, which had been due to sail from Miami on July 23.


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