April 25, 2001
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GD to acquire Newport News
Following the completion of the tender offer and necessary approvals, General Dynamics intends to consummate a second-step merger in which all of the remaining Newport News Shipbuilding shareholders receive the same price paid in the tender offer.
This is the second attempt by General Dynamics to buy Newport News. The first bid, announced in 1999, was rejected by the U.S. Department of Defense since it would have created a monopoly builder of attack submarines and would leave only one company in charge of nuclear work. Apparently, the two companies believe that the Bush Administration will look more kindly than its predecessor on defense mergers.
"Newport News is a solid, well-run company with sustainable revenues and earnings and strong cash flow. Our offer reflects its inherent worth, offers Newport News shareholders an attractive premium, and provides a wonderful opportunity to save significant amounts of money for the U.S. Navy while retaining both nuclear shipyards,'' said Nicholas D. Chabraja, General Dynamics chairman and CEO.
William P. Fricks, chairman and CEO of Newport News Shipbuilding, said, "This acquisition will provide Newport News shareholders an attractive price, and our employees will benefit from being part of a larger, more diverse company. It will enhance job security, and provide more career choices in a wider enterprise. Today, Newport News is the nation's sole supplier of aircraft carriers, and we're teamed with Electric Boat on the Navy's only new submarine program. Combining our companies will provide our customers with significant cost savings to support the nation's need to build more nuclear ships.''
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PHTL said “the project financing is guaranteed by the Maritime Administration's Title XI program, and performance and payment bonds are securely in place with Travelers Casualty and Surety for the full value of the shipbuilding contract. Halter and PHTL anticipate the bankruptcy proceedings will have little effect on the overall construction schedule but acknowledge the forecasted delivery of the vessel could slip by two or three months. PHTL remains confident their new service between California and Hawaii will be inaugurated by Fall 2002. Further updates will follow as the ship nears completion.
PHTL is a joint venture of The Pasha Group and Van Ommeren Shipping (USA) LLC.
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