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March 16 2002

FGH sells Friede & Goldman
Japan's MODEC Inc., a Mitsui Engineering & Shipbuilding Co. affiliate, is helping offshore design pioneer Friede & Goldman Ltd. regain its independence. It announced yesterday that its wholly owned subsidiary, MODEC (USA) Inc. in partnership with the current management team of Friede & Goldman, Ltd. (FGL) has signed a contract with the bankrupt Friede Goldman Halter, Inc. to acquire the assets of Friede & Goldman Ltd. The acquisition is subject to approval by the United States Bankruptcy Court. Separately, FGH's Halter Marine said it had a letter of intent to build two Voith-Schneider tugs.

The FGL management team and MODEC (USA), Inc. have formed an entity called FGL Acquisitions, LLC. Friede Goldman Halter, Inc. said yesterday that it had entered into a contract for that entity to acquire the assets and activities of Friede & Goldman, Ltd. for $8 million and other consideration. FGH says the closing is expected to take place in early May 2002.

James Decker, director, Houlihan Lokey Howard Zukin, investment bankers for FGH said that, besides the cash, the deal "affords Friede Goldman Offshore an opportunity for continued access to all current and future FGL designs and expertise on highly favorable terms."

Friede & Goldman Ltd. has been a pioneer in the field of offshore vessel design for over 50 years.  Some of its more notable designs of the past include the Pacesetter and Trendsetter semi-submersible designs and the L-780 series jack-up design. Over 100 Friede & Goldman, Ltd. designed mobile offshore units are in operation today. In 2001, FGL signed licensing agreements for the newbuild construction of two ExD semi-submersible designs and two JU-2000 jack-up designs, currently under construction in Singapore. One of the company's founders, Jerome Goldman, is a member of the FGH board. It is not known whether he is associated with the acquisition group.

Kenji Yamada, president & CEO of MODEC Inc. commented, "MODEC and Friede & Goldman are respected names in the offshore industry with a proud heritage of completed projects. An association of these two companies will be a strong partnership. We intend to support the existing management team, to aggressively expand its services and designs to the drilling industry. In addition, by forming synergies, we intend to expand our range of solutions for the Floating Production market. MODEC also intends to utilize FGL resources to support it in its FPSO/FSO and TLP projects."

News of the sale of FGL came in the same week that FGH announced vague details of plans for a reorganization that apparently involves splitting off its Friede Goldman Offshore and Halter Marine components into entities that somehow would not be bankrupt.

Yesterday, Jack Stone, principal, Glass & Associates, Inc. and chief restructuring advisor to FGH, commented, "Each of the business units will continue day-to-day operations. Each company continues to market, bid and seek new contracts that will enhance the franchise value of the units. This franchise value enhancement will maximize the recoveries for the creditors. It appears that at this time, there will not be a significant franchise value to allow for the recovery, if any, of our equity security holders under current plans of reorganization."

In a separate announecment, FGH's Halter Marine, Inc.unit said yesterday that it had received a Letter of Intent from Lockheed Martin Overseas Corporation to design, and build two Voith Schneider Tractor Tugs. This is a part of a contract that Lockheed Martin signed with the Egyptian Ministry of Transport earlier this month. Lockheed has released funding for design and planning at this time, with details on the remainder of the project to be finalized later. The project is expected to take twenty-six months to complete.

Anil Raj, COO of FGH said, "The partnership between Halter Marine and Lockheed is added confirmation that demand for quality vessels produced by Halter continues to grow internationally. When coupled with Lockheed Martin's Vessel Traffic Information Management System (VTIMS), Egypt will have all the necessary capabilities to support navigation traffic management and maritime response efforts in the Gulf of Suez. This selection is important to Halter as it finalizes its' plan to emerge from the Chapter 11 process."