Wednesday, June 14, 2000

Cammell Laird takes a stake in Cascade General

Britain's Cammell Laird has taken a minority stake in Portland, Oregon, repairer Cascade General. Liverpool-based Cammell Laird has been expanding rapidly. Annual turnover has grown from £22.6 million in 1997 to £110 million (about $165 million) in 1999. Market capitalization has gone from £93 million in 1998 to £224 million (about $336 million) in 1999. Last month it was the sole bidder for the Varna, Bulgaria, yard.

According to a story in yesterday's Oregonian, the Cammell Laird investment in Cascade General, along with financing from two institutional investors, will give the Portland firm the cash it needs to purchase the Port of Portland's Swan Island Repair Yard. Cascade General has been the sole repair contractor at the Swan Island facility since 1995. It has been trying to buy the yard for the past two years. Now it reportedly has the $30.8 million needed to purchase the facility, which includes the largest floating dry dock in the Americas.

The Oregonian story says Cascade General officials declined to disclose the size of the investment by Cammell Laird. The link is expected to give Cascade General the ability to bid for larger, more sophisticated jobs.

Debt financing will come from Transamerica Equipment Financial Services, headquartered in San Francisco, and Heller Financial in Chicago.

Port commissioners were expected to approve the sale of the Swan Island facility at a regularly scheduled meeting today. The deal is expected to close by July 3.

Royal Caribbean plans for shoreside control of ships' computers
New technology being introduced by Royal Caribbean will enable shore staff to take control of ships' computer desktops and servers via satellite.
The company has signed a renewed contract with Maritime Telecommunications Network (MTN) that includes proviiding the platform for the wireless remote management project. The new contract will also cover Royal Caribbean's Celebrity Cruises.

MTN will provide a C-Band satellite communications network, allowing for shore-to-ship and ship-to-shore telephony, fax, data, and Internet transmission to 17 vessels and six new-builds. MTN will manage, support, and consult on this extensive global satellite network as well as supply and integrate NX Networks voice-over IP multi-plexers and Cisco routers. These systems will act as a platform for the roll-out of RCI's wireless remote management project, based upon Computer Associates' Unicenter TNG software. This project will allow support staff to take control of the ship's computer desktops and servers from land via satellite link, as well as tap GPS (Global Positioning System) information for all of its global operations. This will enable RCI to bring technical support to remote sites upon demand.

Oslo IPO for P& O bulker subsidiary
Associated Bulk Carriers plc ("ABC"), one of the world's largest independent operators of capesize bulk carriers and currently a wholly owned subsidiary of The Peninsular and Oriental Steam Navigation Company (P&O),has published the prospectus for its proposed initial public offering on the Oslo Stock Exchange.  A price range has been set of NOK 45 to NOK 60.  The offering will be effected by a placing of shares with institutions and a public offering to retail investors in Norway.

ABC has a net asset value of approximately $190 million and it is expected that the market capitalization on listing will reflect this.  P&O intends to sell between 60% and 69% of its interest in ABC.  No new shares are to be issued as part of the offering, which is not being made to persons in the U.S., Canada, Australia or Japan .

ABC operates a fleet of 22 capesize dry bulk carriers totalling 3.5 million dwt, ranging in size from 110,000 dwt to 210,000 dwt.  With an average age of 7 years it is one of the youngest capesize fleets in the world.  Fifteen of the vessels are wholly owned, 5 are operated under bareboat charters with purchase options, and 2 are held under finance leases.

A reorganization of ABC was undertaken on May 26,2000 and its business transferred to a newly incorporated holding company.  The vessels were valued by three independent shipbrokers at an average of approximately $430 million.  ABC has net debt and other net liabilities of approximately $240 million with net assets of approximately $190 million.  ABC will remain a British company following the listing.  It is expected that it will operate under the U.K. tonnage tax.

P& O says the market for capesize tonnage has improved significantly from the low levels experienced in late 1998 and first half 1999.  This turnaround is attributable to a recovery in steel production, particularly in Asia, and a contraction of the capesize fleet during 1998. Average revenues have increased from a low point of approximately $5,500 per ship per day in 1999 to the current level of approximately  $16,500 per ship per day.  ABC made a proforma loss in 1999 but is now trading profitably.  The supply/demand outlook over the next two years is positive, says P&O.


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