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May 29, 2002

Matson inks deal with Kvaerner Philadelphia
Matson Navigation Company, Inc., the ocean transportation subsidiary of Alexander & Baldwin, Inc., today signed a contract with Kvaerner Philadelphia Shipyard Inc. for the purchase of two 2,600 TEU containerships. The ships will cost approximately $110 million apiece, including owner's costs, and will be deployed in the company's Hawaii service when construction is completed in late 2003 and in 2004, respectively.

"These two new ships will help ensure that Matson continues to provide Hawaii with efficient, dependable ocean transportation services of superior quality and value," said Matson president and CEO C. Bradley Mulholland. "This significant investment in our Hawaii service underscores our long-term commitment to remaining the state's leading ocean carrier. The vessels are similar in size and speed to Matson's flagship MV R. J. Pfeiffer, the fastest and biggest containership currently operating in the U.S. domestic offshore trades. They will be equipped with a number of features specifically designed to meet Hawaii's current and projected market requirements, particularly bigger container sizes for both refrigerated and dry containers. This will allow us to efficiently accommodate the diversified mix of cargo needed to support the state's island economy."

In addition to being a good match for the Matson fleet, the Kvaerner ships offer the company a unique opportunity to purchase high quality, U.S.-built Jones Act vessels at a relatively low cost. The two ship construction project has been underway since 1999 and is part of an overall plan by Aker Kvaerner Yards, the Philadelphia Shipyard Development Corporation (PSDC), the Delaware River Port Authority (DRPA), the Commonwealth of Pennsylvania, and the City of Philadelphia to rebuild the former Philadelphia Naval Yard as a world class commercial shipyard.

"We are pleased to be working with Matson Navigation on its fleet renewal program," Ron McAlear, president and CEO of Kvaerner Philadelphia said, "and we are proud to have the historic name of Matson on the side of the first ships built at Kvaerner Philadelphia Shipyard. This contract confirms Matson's confidence in Kvaerner's ability to build high quality ships. The Kvaerner Philadelphia Shipyard was built to provide U.S. shipowners with robust ships at realistic prices for the dedicated trades of the U.S. Jones Act. This contract will be the first of many for those trades and proves the value of combining European shipbuilding technology with American management."

"The acquisition of these two new vessels is part of Matson's overall strategy of maximizing the value of our investments in our Hawaii service by providing superior and continuously improving service levels to our customers," Mulholland added. "Matson historically has modified and enhanced its fleet to meet the changing needs of our customers. Examples of this include the SSs Lurline and Matsonia mid-body replacements, which increased their capacity, and conversion of the steamships Maui and Kauai to open-top vessels. We have also purchased suitable Jones Act vessels as opportunities have arisen. These measures have allowed Matson to maintain a high level of service while concurrently maximizing the overall value of these assets."

The new diesel-powered ships replace two 30-year-old steam-powered vessels, and will improve reliability and fuel efficiency, as well as lower operating costs for Matson's fleet. Matson expects to put the first ship into its Hawaii service in late 2003, and the second in 2004. To finance the purchase, Matson will tap its existing Capital Construction Fund of $170 million, supplemented with external borrowings of approximately $50 million.

Alexander & Baldwin president and CEO Allen Doane said, "This capital investment, while dilutive to A&B earnings immediately post-delivery, should improve Matson's and A&B's overall financial performance in the long term. The new vessels will further enhance customer service - with improved speed, capacity and reliability - and, with that, Matson's attractiveness as Hawaii's premier U.S. Flag carrier."

As for its impact on Hawaii, Doane added, "These are high-quality vessels that are also high-value--we were able to secure a very good price for the ships, which ultimately benefits Hawaii's consumers. This investment underscores A&B's strong commitment to Hawaii and ensures that Matson has the resources to continue as Hawaii's leading ocean carrier, helping local business to prosper and providing our residents and visitors with the goods they need."

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