Wednesday, May 24, 2000

Japanese giants plan
shipbuilding merger
Ishikawajima-Harima Heavy Industries Co., Kawasaki Heavy Industries Ltd. and Mitsui Engineering & Shipbuilding Co. (7003) are in talks to integrate their shipbuilding businesses, authoritative Japanese business daily Nihon Keizai Shimbun reports

The three companies will first seek an alliance to cover orders, design and materials procurement. Then they plan to spin off their shipbuilding operations and consolidate them into a joint venture, sources familiar with the deal told the newspaper.

The paper said combined revenue of the three company's shipbuilding business totals $3.4 billion, putting the proposed new joint company ahead of Japan's number one shipbuilder, Mitsubishi Heavy Industries.

The news comes shortly after NKK Corp and Hitachi Zosen Corp had confirmed that they will study the feasibility of cooperating in shipbuilding .

Fire-damaged cruiseliner cleared for safe operation
Holland America Line reports that the Nieuw Amsterdam was cleared for safe operations last evening by the U.S. Coast Guard, following an inspection of fire damage to crew quarters that occurred earlier in the day. The ship is now on its way to Seward, Alaska, the final port call of its current seven-day cruise.

Ten crew cabins sustained damage from the fire, which occurred at about 9:30 a.m., while the ship was cruising near Tarr Inlet, at the northern end of Glacier Bay, Alaska. Of the ten cabins, seven have minor damage. The fire was quickly brought under control and extinguished. Following an initial damage assessment, the ship proceeded on its regular itinerary of scenic cruising of Glacier Bay. The cause of the fire is under investigation. No damage estimate has been made yet.

The Coast Guard was notified of the fire immediately and the guests were advised to go to the outside decks as a precautionary measure.

"The crew handled the situation quickly and professionally," said A. Kirk Lanterman, CEO and chairman for Holland America Line. "It was textbook procedure and all of us are proud of the job done to secure the safety of passengers and the vessel."

No injuries due to the fire were reported; one guest sustained injuries while making his way from his stateroom and has been taken to a regional hospital.

The fire incident caused no operational damage, no environmental damage, and no damage to passenger cabins or public areas. Holland America expects the damaged crew cabins to be fully repaired by June 1.

There are 1,201 guests on board the 704-foot, 33,930-gross-ton ship and 556 crew members. The ship has nine passenger decks and 607 passenger staterooms.


Coast Guard allows damaged Alaska tanker to sail for repairs
After holding the tanker Long Beach in Valdez, Alaska, because it sustained a hairline fracture in its hull, the Coast Guard Captain of the Port (COTP) has released the vessel to sail for Long Beach, Calif., to make permanent repairs.
An oil sheen was observed coming from the vessel when it departed Valdez on May 22 with more than million barrels of oil aboard. The Coast Guard ordered the vessel back into port where divers found a three-inch-long crack in the bottom of the Number Three cargo tank.
Alyeska mobilized spill response equipment to recover the few gallons of oil that seeped from the vessel. Commander Peyton Coleman, COTP, met with officials from the Alaska Department of Environmental Conservation (ADEC) and Sea River Marine, the operators of the ship, to discuss alternatives.
After consulting with Coast Guard marine engineering experts in Washington, D.C., Coleman directed that the oil be offloaded from the damaged tank and that other tanks be ballasted with water to minimize hull stress before allowing the Long Beach to depart Valdez.
"We're taking the conservative approach toward dealing with this problem. Alyeska, the tanker operator, the classification society, ADEC, the Prince William Sound Regional Citizens' Advisory Committee and the Coast Guard are all on the same wave length and want to play it safe to protect the environment and the vessel," remarked Coleman.
The Long Beach was built in 1987 and is one of the newest vessels calling on the Port of Valdez.

Maersk orders tankers from China
China's Guangzhou Shipyard International is to build build eight 35,000-dwt products tankers for the A.P. Moller MaerskGroup of Denmark, according to an agreement signed recently in Beijing. The tankers will be 174 meters in length, 27.4 meters in width and have a draft of 9.75 meters

Stolt Offshore plans refinancing
Stolt Offshore S.A. plans to replace its three largest existing banking arrangements with a new $400 million revolving credit facility. In addition to the bank refinancing, Stolt-Nielsen S.A. (SNSA), the parent of Stolt Offshore, will make an additional investment of $100 million through the purchase of 9.43 million Stolt Offshore Class A Shares.

In December 1999 the company completed the acquisition of ETPM. This
was partially funded by a short-term bridge facility which will be replaced by this refinancing. The company expects the bank refinancing to be completed during its
fiscal third quarter.

The investment by SNSA, which takes effect on or about May 26, 2000 is based on the average value of the Class A shares in the fourteen day period immediately preceding the Stolt Offshore Board meeting on May 5th at which this action was approved and will increase SNSA's ownership of Stolt Offshore to 53%.

Bernard Vossier, CEO of Stolt Offshore said the refinancing and the investment by SNSA "provide additional liquidity and strengthen our balance sheet at a time when we continue to experience weak market conditions in the UK sector of the North Sea, the Gulf of Mexico and in Asia Pacific."

These conditions and the delay of several projects into next year, meant, said Vossier, that uncertainties remain as to the final level of revenues and earnings for the full year with some 20% of anticipated revenues yet to be awarded. "Accordingly second quarter and full year earnings will fall short of current estimates."

"Looking ahead," said Vossier," we see clear evidence of firming market conditions for 2001, and a recovery in the offshore construction sector. I am confident that Stolt Offshore is now very well positioned to profit from the improving market conditions which we see for 2001 and for subsequent years."

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