Wednesday, June 21, 2000

OMI acquires ULCC

OMI Corporation is acquiring Bergesen d.y. ASA's 51% interest in the joint company that owns the 1983-built ultra large crude carrier Settebello (152,374 gt). The acquisition is based on a nominal ship value of $30 million. OMI will pay partially with cash and partially by issuing 1.5 million shares of its common stock to Bergesen at a price of $5.125.

OMI will cause the shares to be registered and, unless the closing stock price for 20 days during the three month period following the registration equals or exceeds $5.125 and 75,000 shares trade on each of those days, OMI will be required to make up the difference to the extent the average of the closing prices for three months following registration is less than $5.125.

OMI's Craig H. Stevenson, Jr. said the acquisition "provides substantial additional upside potential while immediately improving our cash flow. All of our markets are continuing to strengthen and we believe this acquisition is well-timed to take advantage of that strengthening.''

OMI 's fleet comprises 21 vessels, consisting of five wholly-owned Suezmax tankers, three chartered in Suezmaxes, nine handysize product carriers, three 66,000 dwt product carriers currently carrying crude oil and the Settebello

London Club buys $1 billion in extra cover
The London P&I Club has bought overspill reinsurance for the 2000/2001 policy year, for P&I claims in a $1billion layer above the International Group excess loss program

A number of other International Group clubs have arranged similar cover.
The London Club says the overspill cover "will protect the club, and therefore its members, by reducing the possibility of additional calls which could result from the club having to contribute its share of any overspill claim."

While there are clear benefits to be achieved from overspill cover, the London Club says it is careful to get value for money.

While at least two other International Group clubs have entered into Alternative Risk Transfer (ART) arrangements with reinsurers in the past year, the London Club's committeebelieves that "potential benefits from ART programs are marginal, while the costs of such products can be very high."

Gulf OSV rates start to firm
Daily rates for supply vessels, and tug supply vessels have started to firm
up in the U.S Gulf., notes shipbroker Marcon. In January 2000, Marcon said that rates were "poised'" for an improvement . Now, says Marcon's latest SUPPLY & TUG SUPPLY BOAT MARKET REPORT , daily hire rates for the month of June 2000
indicate that the standard 180 ft PSV class is running firm at the $3,500/day level depending upon length of contract, terms, etc.

"Speaking with one owner/operator," says Marcon, "we were encouraged to hear that newer jobs were being bid out at as higher as $3,800-3,900/day, and available vessels ready to go to work immediately were scarce on a 'spot' basis."

Utilization may be getting tight, but there are still plenty of this class of vessel
laid idle in the region, and newer, larger vessel will continue to exert
downward pressure on the smaller vessels. Reactivation of some of the
remaining idle tonnage in the region could affect a continued improvement in
daily rates. However, it is unlikely that vessels requiring extensive
investment to undergo USCG inspections and related repair work to re-enter
the market will be brought in at this stage of the recovery."

Out of a total of 5,089 vessels tracked by Marcon, 1,064 are supply and tug
supply boats. Since one year ago, the total number of supply and tug supply
boats Marcon has officially on the market for sale has increased by 32
vessels. At this time Marcon has listed for sale a total of 1 tug supplier
and 4 straight supply boats built within the magical ten year window. 32
tug suppliers and 20 supply boats listed are 25 years of age or older with
the oldest tug supplier being built in 1967 and the oldest supply boat built
in 1957.


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