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Tuesday, September 5, 2000


Hvide credit agreement amended
Hvide Marine Inc. is now under less pressure to sell revenue-producing assets to pay down its debt. It said today that it had reached agreement with its bank group on an amended credit agreement. It cuts the amount of debt that Hvide must prepay by year-end from $60 million to $40 million. To date, Hvide has prepaid approximately $22 million of bank debt through the sale of 20 vessels. The new agreement also removes a requirement forHvide to pay down $35 million of debt by August 31.

"This is good news and gives us the flexibility going forward to maximize our earnings potential,'' commented CEO Gerhard E. Kurz. "It also shows recognition by our bank group that business conditions, particularly in the offshore markets, are improving, and that the sale of strong revenue-producing assets, which have further growth potential, would not be in the best long-term interests of our shareholders and creditors.''

 

Fred Olsen shores up H&W
An arbitration hearing began in London today on the dispute between Belfast shipbuilder Harland & Wolff and Global Marine over the payment of the delivery instalment and other sums related to the drillship Jack Ryan.

Global Marine's failure to make these payments has caused the shipyard severe problems. Today, its majority shareholder, Norway's Fred Olsen Energy said it would fund the yard "on an interim basis" until completion of the arbitration hearing.

To "fund the completion of the drillship, support H&W in running the business, pay redundancy and under-utilisation costs,
fund additional interest costs and the delay in receipt of the delivery monies," Fred Olsen will put up about $31 million of short term funding. This is in addition to guranteeing an approx $75 million HSBC bank loan facility taken up by H&W.

Receipt by H&W of the delivery monies in cash of around $41 million including intervention aid, will be used by H&W to reduce the bank loan facility, reducing Fred Olsen's guarantee exposure to about $34 million.
"This would facilitate a continued support by FOE of a yard adjusted to the present workload at the earlier stated support
exposure of about £50 million [$75 million approx]," says Fred Olsen Energy

"Non-receipt of the delivery amounts in cash, or at least a substantial part thereof, following the arbitration hearing will
leave H&W in a situation without the necessary funding for a continuation of its operation, " warns Fred Olsen Energy. "In these circumstances one alternative would be a controlled close down of the yard, the cost of which would be in the order of £15 million.[$22.5 million approx.]"

The main dispute between Harland & Wolff and Glomar, cost overruns in the construction of the Jacvk Tyan and another drillship, is subject to separate arbitration proceedings.


BC Ferries tests Pacificat wake reduction measures
Besides costing vastly more than projected, BC Ferries problematic Pacificat catamarans have raised concerns about wake and wash effects on shorelines and docks between Horseshoe Bay and Departure Bay. As a result, in July 1999 BC Ferries reduced the speed of the vessels between Horseshoe Bay and Bowen Island.

Now BC Ferries is testing additional course and speed adjustments to reduce potential wake effects. The changes are recommended in a report by Sandwell Engineering, a Vancouver-based marine engineering company hired by BC Ferries last fall when the wake and wash concerns were raised.

Based on the report's findings, BC Ferries believes the speed and course changes will reduce the potential impacts of wake and wash on sensitive areas. These new courses and speeds will result in conditions at the shoreline that are similar to those generated by existing conventional vessels.

PacifiCat crews are currently testing the additional changes to the course and speed to minimize the fast ferries' wash without compromising travel time.

The study examined the ferries' wake in relation to speed, water depth and shorelines.

The report also concluded that naturally occurring waves during the summer have less energy than PacifiCat waves but occur more often. Storms that occur throughout the year can be between four and 15 times stronger than the PacifiCat waves and occur much more frequently.

Sandwell has recommended that BC Ferries develop a monitoring program, particularly for populated and ecologically sensitive areas. Proceeding with this program will depend on the future disposition of the vessels.

BC Ferries chose PricewaterhouseCoopers in June to oversee the sale of the three PacifiCats. The first two PacifiCats are being rotated two weeks on, two weeks off to demonstrate their value to potential buyers. The third vessel has been moved to BC Ferries' Deas Dock while the sale is under way.

Even though the PacifiCats are up for sale, the report was completed to provide the corporation with the information needed, while the ships continue to be operated by BC Ferries. The findings will also be valuable to potential buyers.

Copies of the executive summary are available on BC Ferries' Web site at http://www.bcferries.bc.ca

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