Thursday, March 9, 2000

Crystal to order third cruise ship
Crystal Cruises has made a commitment to build a third ship. The line's parent company, NYK, (Nippon Yusen Kaisha)is now negotiating with shipyards.

"We are strongly committed to the cruise business as it is one of the core businesses of NYK," said Jiro Nemoto,
chairman of NYK , the largest shipping company in the world.

In keeping with the character and success of its Crystal Harmony and Crystal Symphony, both of which have a 940 passenger capacity, Crystal Cruises plans to build a luxury ship of similar size.

"We are enjoying our highest ratings and a record demand for our product. All the elements confirm that this is the ideal time for expansion," said Joseph A. Watters, Crystal Cruises' president. "The growth of our fleet offers even more luxury vacation possibilities for our guests, commercial benefits for our travel agent partners, and tremendous opportunities for our shore-side and shipboard employees."

Frontline acquires big pile of Golden Ocean senior notes
Bermuda-based Frontline has, as of March 8, 2000 acquired $46.75 million of Golden Ocean Limited's $296 million Senior Notes due in August 2001. Average acquisition price was approximately 11% of par value.

Golden Ocean Group, which filed for Chapter 11 bankruptcy protection in January, controls 17 VLCCs built after 1995. Five of the VLCCs are still under construction. Golden Ocean also controls eleven modern bulkcarriers. Most of the the group's current tonnage is presently employed on medium to long term charters. Golden Ocean has been given a period of up to 135 days to file a petition for reorganization. Frontline says It is likely that any restructuring solution will give the bondholders a new debt instrument as well as the overwhelming majority equity stake in the Golden Ocean Group.

Since 1996 Frontline has been a leading tanker industry consolidator. It sees its limited investment in Golden Ocean as an opportunity to accelerate this consolidation process further. As one of Golden Ocean's largest creditors, Frontline will seek to be actively involved in the restructuring process. Frontline will, on request from the company and the creditors, be prepared to act as manager for the Golden Ocean Group. It says this solution could substantially reduce Golden Ocean's administrative costs and thereby improve its tight cashflow position. Management by Frontline, which today is the world's largest independent tanker owner, should also increase Golden Ocean's commercial credibility.

Frontline feels that the Golden Ocean Bonds are fully valued at this time and will currently not seek to acquire more bonds in Golden Ocean. Frontline--alone, or together with other industry partners--could however at acceptable terms, be prepared to advance new cash equity or new debt instruments into the Golden Ocean Group. These proceeds would be used to secure its financial stability of the Group. The most immediate need is to secure adequate equity financing for the remaining five VLCC newbuildings from Hitachi and Kawasaki, and ensure the group has adequate working capital to continue its business.

Harland & Wolff prepares for layoffs
Even as it battled with Chantiers de l"Atlantique to win Cunard's Project Queen Mary order, Northern Ireland's Harland and Wolff Shipbuilding and Heavy Industries Ltd yesterday issued a 90 day protective notice of intention to effect a redundancy program covering all 1,353 employees. A consultation process with the relevant Trade Union representatives was initiated immediately.

Brynjulv Mugaas, Group Chief Executive of Harland and Wolff, said that the yard's current orderbook is scheduled for completion around June of this year "and we are already beyond the point where there was a compelling argument to begin a redundancy program, as a number of trades are not fully utilized. "

"Whilst we are exploring every opportunity to secure, not only major orders, but also additional workload that would provide immediate contributions, the uncertainty regarding the timing of these makes the notification of this redundancy program unavoidable," he said.

He said the price tendered Cunard for the Queen Mary 2 was "robust and competitive for a vessel of such significance" and that " there is no question of our ability to meet the delivery requirement of the owner." However, Mugaas said it was proving "extremely difficult to make sufficient progress in relation to putting together the required financing package."

"As a result of our inability to assure Cunard / Carnival that we will be able to meet the financing requirements, it will be very difficult for Harlandand Wolff to secure this contract. Whilst the company remains confident that a major new order will be forthcoming, and that employment levelswill return to at least the current levels, it has no alternative but to take this protective measure.

"In addition, for the board to go forward with confidence, particularly in relation to such a high profile project as Queen Mary 2, we have sought to put in place a Dispute Free Agreement for the duration of the contract, embracing increases in wages, salaries and bonuses based on performance.

"Despite repeated attempts to ensure that our workforce would embrace this agreement, the refusal of a large proportion of employees to do so would make it impossible to enter into any future contract with confidence in our ability to perform.

"Over the past year, demand in our core offshore business has been at a very low level, as major oil companies and drilling contractors have continued to adopt a cautious attitude to major new field developments. Those that have come to the market have been the subject of extreme price competition, particularly from South Korean yards, which, despite the recent efforts of various national governments and the EU, continue to offer prices based on no commercial rationale.

"In addition, the prolongation of the ordering process for various U.K. Ministry of Defense projects, has also caused difficulties for many UK yards for whom these orders would provide much needed workload until such times as the international markets recover."


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