May 5, 2008
Aker Philadelphia in $560 million agreement with Cat Finance
Aker Philadelphia Shipyard (Oslo: AKPS) has entered into a loan agreement with Caterpillar Financial Services Corporation (Cat Finance) to increase its line of credit to $150 million.
Under the agreement, Cat Finance will fund up to $80 million per ship for the construction cost of seven consecutive product tankers, valuing the agreement at $560 million.
The shipyard will only make interest payments during the construction period and can apply the funding to up to three ships simultaneously. Cat Finance has provided funding to the shipyard since 2002 when a $100 million line of credit was initiated.
Jeff Theisen, Aker Philadelphia Shipyard's Chief Financial Officer, remarked, "This new agreement with Cat Finance provides a level of financial flexibility which is critical to the shipyard. As our business model has continued to evolve, our long-standing partnership with Cat Finance has yielded innovative and mutually beneficial solutions such as this to meet our capital needs and build on an already strong financial position."
The loan agreement secures construction financing for the remainder of the current fleet of 12 Jones Act tankers under construction through 2011. Four of those tankers have already been delivered, with three more currently under construction at the yard. As each vessel is completed, it is sold to Aker American Shipping for bareboat charter to OSG America.