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Cruising: New Ships and New Thinking

Now there are signs that new players are eyeing the market.

One is Trondheim, Norway, entrepreneur Olav Norum. He is putting together a venture called Project Vision Quest that intends to target the U.S. market for conferences at sea with three 273 m long, 70,000 gt , 1,200 passenger ships developed in cooperation with Aker Finnyards Technology. The price tag of each ship would be around Euros 390 million (about $510 million). Plans are for the first ship to be delivered in 2007.

Facilities aboard each ship would include conference seating for 1,300 people, with some 3,500 square meter of convertible exhibition/conference space.

So if Norum builds these ships, will people come? Vision Quest only needs to capture a tiny percentage of the U.S. conference market in order to fill the ships. In the past the issue of U.S. tax deductibility of conference expenses aboard foreign ships has been one argument used in favor of building U.S.-flag cruise ships. Norum says he is aware of the issue, but that the much lower cost of staging an event on board an internationally flagged vessel would more than offset the tax savings in question.
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Tidewater to raise $425 million in private note placement

Closings are contemplated October 15, 2010 and December 30, 2010, when the company expects to issue a multiple series of notes totaling $310 million and $115 million, respectively. The notes will have maturities ranging from 5 years to 12 years and have a weighted average life to maturity of approximately 9 years. The notes may be retired before their respective scheduled maturity dates subject only to a make-whole provision. The weighted average coupon on the notes is 4.25 percent.

Dean Taylor, Tidewater’s Chief Executive Officer, noted “Tidewater’s ability to access the credit and capital markets on very favorable terms reflects the company’s strong financial position. In recent quarters, the company’s focus has shifted from fleet renewal and earnings replacement to longer-term growth initiatives. Competitive financing arrangements allow us to opportunistically acquire and/or build vessels that address changing customer requirements and to best position our company for a future market recovery.”

Proceeds from the note sales will be used to refinance borrowings under Tidewater’s $450 million revolving credit facility, which remains available until May 2012, to fund capital expenditures related to the Company’s on-going fleet enhancement program and for general corporate purposes.

The notes will be sold in a private placement to purchasers that are accredited investors and are restricted securities that may not be resold by such purchasers except pursuant to an exemption from registration under the federal securities laws.

Damen Vinashin Shipyard starts construction

Mr. Nguyen Duy Hung, Vice Operations Director of Song Cam Shipyard signed, together with Mr. Erik van der Noordaa, Chief Operations Officer of the Damen Shipyards Group in The Netherlands.

Song Cam Shipyard has been allocated by Vinashin to act as the local partner in the construction and operation of the new shipyard which is a joint venture between Vinashin and Damen.

Completion of the first phase of the project is planned for February 2012. In the first phase the shipyard will concentrate on the outfitting, under cover, of hulls built by Song Cam Shipyard. Capacity is approximately twelve vessels per year, all current orders are for export.

Facilities in the first phase include a 2500 ton capacity Syncrolift, an 80 m x 40 m outfitting hall and workshops and offices.

In the second phase of the five year plan, capacity will be increased to a maximum 30 tugs, workboats and high speed craft per year with a dedicated 160 m x 150 m outfitting . Sufficient room is available on the 42 hectare site for the construction of hulls as well as for sub-contractors and suppliers in the final phase of the five year plan.

Trico Marine files for Chapter 11 protection

According to a document filed with the court, the companies have total debts estimated at $353.6 million and assets of $30.56 million. The largest single unsecured creditor is Joseph S. Compofelice with a claim in relation to an employment agreement of $2.4 million, which is categorized as “contingent, unliquidated, disputed and subject to set off.”

Mr. Compofelice was replaced as the company’s Chairman, President and Chief Executive Officer on May 29.

You can access court documents and other general information about the Chapter 11 cases HERE

Aside from the Cayman Islands holding company, Trico’s foreign subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Trico says that its U.S. and worldwide operations are expected to continue without interruption during the restructuring process.

Chairman of the Board of Directors, President and Chief Executive Officer, Richard A. Bachmann commented, “Over the last several months, we have worked diligently to improve our liquidity, including through the sale of $3 million of non-core assets, the sale of a North Sea class vessel for $16 million and additional cost-cutting initiatives. While we are beginning to see indications of improved operational performance, the combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due, has led us to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders. While we are continuing discussions with our lenders, the Board decided to begin this process now in order to get the company’s restructuring underway without delay. We intend to move through this process as quickly as possible. Throughout the restructuring process, we will remain focused on operating our business worldwide while continuing our efforts to manage costs, strengthen our balance sheet and gain financial flexibility in order to position Trico as a strong and profitable competitor in our industry.”

In conjunction with the filing, Trico has received a commitment for up to $35 million in debtor-in-possession (DIP) financing from Tennenbaum DIP Opportunity Fund and other funds managed by Tennenbaum Capital Partners, LLC, of which $10 million will represent incremental liquidity. The company says it “expects that, upon court approval and satisfaction of other customary conditions, the DIP financing, combined with cash from the company’s ongoing operations, will provide funding to support the business. In addition, the company anticipates that it will meet its obligations going forward to its employees, customers and suppliers.”

Separately, the company announced that Trico Shipping AS and its affiliates have reached an agreement in principle for $22 million in senior secured multi-draw term loan financing from certain holders of its 11 7/8% Senior Secured Notes (the “Trico Shipping Notes”) representing approximately 80% of the Trico Shipping Notes and from Tennenbaum. The closing of this financing arrangement is subject to obtaining required consents, as well as certain other closing conditions of Trico Shipping AS and its affiliates. This financing would be used to fund operating expenses and other working capital needs.

“We look forward to working together with all of our stakeholders to complete a successful financial restructuring,” said Mr. Bachmann. “Our global operations are expected to continue without interruption throughout the restructuring process, and we remain committed to providing our customers with high quality service. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the company.”

Trico will file a series of motions with the court to ensure the continuation of normal operations, including requesting court approval to continue paying employee wages and salaries and providing employee benefits without interruption and to continue use of its bank accounts and insurance policies. The company expects the court to approve these requests. The company says that during the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the U.S. Bankruptcy Code, and Trico has taken steps to ensure continued supply of goods and services to its customers.

Trico Marine files for Chapter 11 protection

According to a document filed with the court, the companies have total debts estimated at $353.6 million and assets of $30.56 million. The largest single unsecured creditor is Joseph S. Compofelice with a claim in relation to an employment agreement of $2.4 million, which is categorized as “contingent, unliquidated, disputed and subject to set off.”

Mr. Compofelice was replaced as the company’s Chairman, President and Chief Executive Officer on May 29.

You can access court documents and other general information about the Chapter 11 cases HERE

Aside from the Cayman Islands holding company, Trico’s foreign subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Trico says that its U.S. and worldwide operations are expected to continue without interruption during the restructuring process.

Chairman of the Board of Directors, President and Chief Executive Officer, Richard A. Bachmann commented, “Over the last several months, we have worked diligently to improve our liquidity, including through the sale of $3 million of non-core assets, the sale of a North Sea class vessel for $16 million and additional cost-cutting initiatives. While we are beginning to see indications of improved operational performance, the combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due, has led us to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders. While we are continuing discussions with our lenders, the Board decided to begin this process now in order to get the company’s restructuring underway without delay. We intend to move through this process as quickly as possible. Throughout the restructuring process, we will remain focused on operating our business worldwide while continuing our efforts to manage costs, strengthen our balance sheet and gain financial flexibility in order to position Trico as a strong and profitable competitor in our industry.”

In conjunction with the filing, Trico has received a commitment for up to $35 million in debtor-in-possession (DIP) financing from Tennenbaum DIP Opportunity Fund and other funds managed by Tennenbaum Capital Partners, LLC, of which $10 million will represent incremental liquidity. The company says it “expects that, upon court approval and satisfaction of other customary conditions, the DIP financing, combined with cash from the company’s ongoing operations, will provide funding to support the business. In addition, the company anticipates that it will meet its obligations going forward to its employees, customers and suppliers.”

Separately, the company announced that Trico Shipping AS and its affiliates have reached an agreement in principle for $22 million in senior secured multi-draw term loan financing from certain holders of its 11 7/8% Senior Secured Notes (the “Trico Shipping Notes”) representing approximately 80% of the Trico Shipping Notes and from Tennenbaum. The closing of this financing arrangement is subject to obtaining required consents, as well as certain other closing conditions of Trico Shipping AS and its affiliates. This financing would be used to fund operating expenses and other working capital needs.

“We look forward to working together with all of our stakeholders to complete a successful financial restructuring,” said Mr. Bachmann. “Our global operations are expected to continue without interruption throughout the restructuring process, and we remain committed to providing our customers with high quality service. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the company.”

Trico will file a series of motions with the court to ensure the continuation of normal operations, including requesting court approval to continue paying employee wages and salaries and providing employee benefits without interruption and to continue use of its bank accounts and insurance policies. The company expects the court to approve these requests. The company says that during the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the U.S. Bankruptcy Code, and Trico has taken steps to ensure continued supply of goods and services to its customers.

Trico Marine files for Chapter 11 protection

According to a document filed with the court, the companies have total debts estimated at $353.6 million and assets of $30.56 million. The largest single unsecured creditor is Joseph S. Compofelice with a claim in relation to an employment agreement of $2.4 million, which is categorized as “contingent, unliquidated, disputed and subject to set off.”

Mr. Compofelice was replaced as the company’s Chairman, President and Chief Executive Officer on May 29.

You can access court documents and other general information about the Chapter 11 cases HERE

Aside from the Cayman Islands holding company, Trico’s foreign subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Trico says that its U.S. and worldwide operations are expected to continue without interruption during the restructuring process.

Chairman of the Board of Directors, President and Chief Executive Officer, Richard A. Bachmann commented, “Over the last several months, we have worked diligently to improve our liquidity, including through the sale of $3 million of non-core assets, the sale of a North Sea class vessel for $16 million and additional cost-cutting initiatives. While we are beginning to see indications of improved operational performance, the combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due, has led us to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders. While we are continuing discussions with our lenders, the Board decided to begin this process now in order to get the company’s restructuring underway without delay. We intend to move through this process as quickly as possible. Throughout the restructuring process, we will remain focused on operating our business worldwide while continuing our efforts to manage costs, strengthen our balance sheet and gain financial flexibility in order to position Trico as a strong and profitable competitor in our industry.”

In conjunction with the filing, Trico has received a commitment for up to $35 million in debtor-in-possession (DIP) financing from Tennenbaum DIP Opportunity Fund and other funds managed by Tennenbaum Capital Partners, LLC, of which $10 million will represent incremental liquidity. The company says it “expects that, upon court approval and satisfaction of other customary conditions, the DIP financing, combined with cash from the company’s ongoing operations, will provide funding to support the business. In addition, the company anticipates that it will meet its obligations going forward to its employees, customers and suppliers.”

Separately, the company announced that Trico Shipping AS and its affiliates have reached an agreement in principle for $22 million in senior secured multi-draw term loan financing from certain holders of its 11 7/8% Senior Secured Notes (the “Trico Shipping Notes”) representing approximately 80% of the Trico Shipping Notes and from Tennenbaum. The closing of this financing arrangement is subject to obtaining required consents, as well as certain other closing conditions of Trico Shipping AS and its affiliates. This financing would be used to fund operating expenses and other working capital needs.

“We look forward to working together with all of our stakeholders to complete a successful financial restructuring,” said Mr. Bachmann. “Our global operations are expected to continue without interruption throughout the restructuring process, and we remain committed to providing our customers with high quality service. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the company.”

Trico will file a series of motions with the court to ensure the continuation of normal operations, including requesting court approval to continue paying employee wages and salaries and providing employee benefits without interruption and to continue use of its bank accounts and insurance policies. The company expects the court to approve these requests. The company says that during the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the U.S. Bankruptcy Code, and Trico has taken steps to ensure continued supply of goods and services to its customers.

Trico Marine files for Chapter 11 protection

According to a document filed with the court, the companies have total debts estimated at $353.6 million and assets of $30.56 million. The largest single unsecured creditor is Joseph S. Compofelice with a claim in relation to an employment agreement of $2.4 million, which is categorized as “contingent, unliquidated, disputed and subject to set off.”

Mr. Compofelice was replaced as the company’s Chairman, President and Chief Executive Officer on May 29.

You can access court documents and other general information about the Chapter 11 cases HERE

Aside from the Cayman Islands holding company, Trico’s foreign subsidiaries were not included in the filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Trico says that its U.S. and worldwide operations are expected to continue without interruption during the restructuring process.

Chairman of the Board of Directors, President and Chief Executive Officer, Richard A. Bachmann commented, “Over the last several months, we have worked diligently to improve our liquidity, including through the sale of $3 million of non-core assets, the sale of a North Sea class vessel for $16 million and additional cost-cutting initiatives. While we are beginning to see indications of improved operational performance, the combination of a sluggish economy, a highly leveraged balance sheet and imminent interest payments due, has led us to determine that a court-supervised restructuring is the best course of action for the company and its stakeholders. While we are continuing discussions with our lenders, the Board decided to begin this process now in order to get the company’s restructuring underway without delay. We intend to move through this process as quickly as possible. Throughout the restructuring process, we will remain focused on operating our business worldwide while continuing our efforts to manage costs, strengthen our balance sheet and gain financial flexibility in order to position Trico as a strong and profitable competitor in our industry.”

In conjunction with the filing, Trico has received a commitment for up to $35 million in debtor-in-possession (DIP) financing from Tennenbaum DIP Opportunity Fund and other funds managed by Tennenbaum Capital Partners, LLC, of which $10 million will represent incremental liquidity. The company says it “expects that, upon court approval and satisfaction of other customary conditions, the DIP financing, combined with cash from the company’s ongoing operations, will provide funding to support the business. In addition, the company anticipates that it will meet its obligations going forward to its employees, customers and suppliers.”

Separately, the company announced that Trico Shipping AS and its affiliates have reached an agreement in principle for $22 million in senior secured multi-draw term loan financing from certain holders of its 11 7/8% Senior Secured Notes (the “Trico Shipping Notes”) representing approximately 80% of the Trico Shipping Notes and from Tennenbaum. The closing of this financing arrangement is subject to obtaining required consents, as well as certain other closing conditions of Trico Shipping AS and its affiliates. This financing would be used to fund operating expenses and other working capital needs.

“We look forward to working together with all of our stakeholders to complete a successful financial restructuring,” said Mr. Bachmann. “Our global operations are expected to continue without interruption throughout the restructuring process, and we remain committed to providing our customers with high quality service. We appreciate the ongoing dedication of all our employees, whose hard work is critical to our success and the future of the company.”

Trico will file a series of motions with the court to ensure the continuation of normal operations, including requesting court approval to continue paying employee wages and salaries and providing employee benefits without interruption and to continue use of its bank accounts and insurance policies. The company expects the court to approve these requests. The company says that during the Chapter 11 process, suppliers will be paid in full for all goods and services provided after the filing date as required by the U.S. Bankruptcy Code, and Trico has taken steps to ensure continued supply of goods and services to its customers.

Island Offshore orders LNG-fueled PSV’s

The vessels are scheduled for delivery in the second and third quarters of 2012. The hulls will be built at the Braila shipyard in Romania, and outfitted in Brevik, Norway. The total value of the contracts amounts to approximately NOK 900 million (about $143 million).

The vessels are of Rolls-Royce UT776 CDG design. Island Offshore has four UT776’s in service and two more under construction. The vessels just ordered at STX Offshore Norway will be the first for Island Offshore to be LNG-fueled and, in fact, the first LNG fueled UT vessels designed and powered by Rolls-Royce.

“We are extremely happy with the performance of these UT vessels, as are our clients,” said Island Offshore Managing Director Håvard Ulstein. “A very important area for Island Offshore is reduction in fuel consumption. With the UT 776, the favourable hull lines contribute to a very low consumption rate over a wide range of operating drafts. We believe that the most significant contribution to reducing emissions is to reduce fuel consumption for a given amount of work done. Going for LNG fuel is a logical step in reducing emissions even further.”

Rolls-Royce has worked for several years developing designs and systems for offshore vessels using LNG as fuel.

Rolls-Royce has developed a gas-electric diesel-electric propulsion system for the new vessel. The effective capacity of the gas tanks is about 200 cu.m, corresponding to 10-20 day operation on gas alone depending on the exact operational profile. The gas engines are two of the new C26:33 series from Rolls-Royce.

“Now that more gas infrastructure is in place, it is realistic for customers to select this fuel and these designs and systems” commented Atle Gaasø,Rolls-Royce’s General Manager Sales for offshore service vessels. “We are very happy to be working with Island Offshore, as they are a very forward-thinking company with a strong focus on efficiency and the environment, as they have already shown with their pioneering Rolls-Royce designed well intervention vessels.”

“The UT 776 type has seen continued development from order to order, with our newest vessels building upon the experience and lessons learned from our earlier ones. By choosing this design we have managed to maintain high levels of standardization, and continue the good cooperation on design and equipment we have with Rolls-Royce. The current design sets a standard that we think will do very well for the future,” added Håvard Ulstein.

The new UT776 CDG is 96 m long with a beam of 20 m, and will transport all normal offshore supplies. The ship will also be equipped for oil recovery. Deadweight is approximately 4,750 t

Roy Reite, President of STX Norway Offshore, says: “We appreciate the good relations we have with Island Offshore, and that this cooperation once again has led to the building of new vessels. We have in total been awarded more than thirty new building contracts with Island Offshore, and we look forward to continuing the good cooperation.”

Joe Angelo to be next Intertanko Managing Director

Mr. Angelo, who is currently Deputy Managing Director, will succeed Peter Swift when he retires on December 31, 2010.

Katharina (“Kathi”) Stanzel has been appointed Deputy MD.

Intertanko says it had an “overwhelming level of interest” in the job and some highly qualified and capable individuals were shortlisted. “We are grateful and flattered by some of the names who threw their hat into the ring,” says Graham Westgarth, Intertanko’s Chairman. “Ultimately however, we felt that Joe and Kathi working together to lead Intertanko through its change of MD was an optimal solution.”

Joe Angelo has worked for Intertanko for six years, first as Director of Regulatory Affairs and the Americas.

He is a a1971 graduate of the U.S. Merchant Marine Academy at King’s Point, N.Y.

Prior to joining Intertanko, as a member of the U.S. Senior Executive Service, he held various senior roles with the U.S. Coast Guard — lastly as Director of Standards for Marine Safety, Security And Environmental Protection, — where he led U.S. delegations at IMO.

“Joe is a well respected figure not only within Intertanko but also in the corridors of the iIMO and the international shipping community. Having initially not been available for selection we are delighted this subsequently changed and are pleased that he agreed to take up the challenge,” said Mr. Westgarth.

Kathi Stanzel joins intertanko from the International Oil Pollution Compensation Funds (IOPC). A marine biologist by profession, she has worked in senior technical advisory and claims management roles within the marine pollution sector.

“In her twelve years with ITOPF and IOPC, Kathi has attended and been responsible for handling many major ship source pollution incidents including the Erika and Prestige,” said Mr. Westgarth. “Acting as a signatory on behalf of the 1971 and 1992 Oil Pollution Compensation Funds, she advises governments on oil pollution response measures and potential impacts. She has been extensively involved in the work of the OPRC-HNS technical group and the development of IMO guidance documents for the Marine Environment Protection Committee, focusing both on oil and other hazardous and noxious substances.”

K-Sea gets $100 million cash injection

Last week, K-Sea had postponed its fourth quarter fiscal 2010 earnings conference call, which had been scheduled for August 31. It staged the call today. It is being archived for seven days and can be accessed HERE

KA First Reserve will appoint three directors to the board of K-Sea’s general partner and will be granted the right to acquire a 35 percent interest in the entity that owns the company’s Incentive Distribution Rights, or IDRs.

The board will be expanded from six members to nine members; KA First Reserve’s designees to join the board are Gary Reaves of First Reserve and Kevin McCarthy and Jim Baker of Kayne Anderson.

President and CEO Timothy J. Casey said, “We are very pleased with our new association with First Reserve and Kayne Anderson. These organizations have a wealth of experience and expertise in the MLP and energy businesses. Their decision to invest in us is a testimony to K-Sea’s leading industry position and the strength of our company. With our balance sheet recapitalization behind us, we will be able to focus on operations, results and new opportunities. We remain convinced the domestic market for marine transportation of refined petroleum products will rebound significantly when demand recovers and single hull vessels leave the market permanently.”

Mr. Casey said the company continues to concentrate on cost control and eliminating low-return assets. “On the latter point,” he said, “we have a definitive agreement to sell two tugboats and our two oldest double-hulled barges to an international buyer, and we have a definitive agreement to sell our environment services property in Norfolk, Virginia. Both transactions should close in the September 2010 quarter.”

The proceeds from the sale of the preferred units will be used to reduce outstanding indebtedness and pay fees and expenses related to the transaction. The investment is expected to close in two steps — $85 million in early September and the remaining $15 million within the thirty days following clearance of Hart-Scott-Rodino review.

K-Sea has also executed amendments to its revolving credit facility and term loans that will become effective on closing of the initial $85 million investment. The amendment to the revolving credit facility reduces the lenders’ commitments from $175 million to $115 million; amends the financial covenants; maintains a July 1, 2012 maturity date; and allows the company to pay distributions subject to certain minimum financial ratios. After applying the expected net proceeds of the $100 million Preferred Unit investment, the company’s total funded debt as of September 1, 2010 was $279.2 million on a pro forma basis, which represents a ratio of Funded Debt to EBITDA (as defined in the revolving credit agreement) of 4.3 times fiscal year 2010 EBITDA.

The preferred units will have a coupon of 13.5%, with payment-in-kind distributions through the quarter ended June 30, 2012 or, if earlier, when the company resumes cash distributions on its common units. The preferred units convert on a unit-for-unit basis into common units at KA First Reserve’s option. The preferred units were priced at $5.43 per unit, which represents a 10% premium to the 5-day volume weighted average price of K-Sea’s common units as of August 26, 2010.

The company will have an option to force conversion after three years if the price of K-Sea’s common units is 150% of the conversion price on average for 20 consecutive days on a volume-weighted basis.

K-Sea describes First Reserve as “one of the world’s leading private equity firms in the energy industry, making both private equity and infrastructure investments throughout the energy value chain, with approximately $19 billion under management” and Kayne Anderson as “a leading investment firm focused on the energy industry with approximately $10 billion under management and […] the largest institutional investor in MLPs.”

The pricing grid for the amended credit facility changes only when the total funded debt to EBITDA ratio rises above 5.0 times. It is expected that the company’s interest cost under the revolving credit facility will rise by 50 basis points at the effective date.

OPERATING RESULTS

K-Sea also today reported operating results for its fourth fiscal quarter ended June 30, 2010. The company reported an operating loss of $0.5 million, excluding a $54.3 million write-off of goodwill and an impairment charge of $5.1 million on excess tugboats. This represents a decrease of $8.8 million, compared to $8.3 million of operating income for the fourth fiscal quarter ended June 30, 2009. Including the write-off of goodwill and the impairment loss, our operating loss for the quarter was $59.9 million. Earnings before interest, taxes, depreciation and amortization (“EBITDA”) for the fourth quarter of fiscal 2010 was $12.4 million, a decrease of $9.1 million, or 42%, compared to $21.5 million in the same quarter last year; and an increase of $3.3 million, or 36%, compared to $9.1 million for the March 2010 quarter. There were two special items in the fiscal 2010 fourth quarter that impacted EBITDA: a $1.0 million charge for an additional insurance call previously mentioned in our financial statements; and a $0.8 million gain from the sale of assets. Excluding these items, EBITDA was $12.6 million. EBITDA is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below.

Three Months Ended June 30, 2010

For the three months ended June 30, 2010, the Company reported an operating loss of $0.5 million, excluding the previously mentioned write-off of goodwill and impairment charge. This represents a decrease of $8.8 million, compared to $8.3 million of operating income for the three months ended June 30, 2009. EBITDA decreased by $9.1 million, or 42%, to $12.4 million for the three months ended June 30, 2010, compared to $21.5 million for the three months ended June 30, 2009. EBITDA was negatively impacted by a non-recurring $1.0 million insurance charge relating to an additional insurance call by the Company’s insurance carrier. The carrier had previously announced the possibility of the call in November 2008; however, the insurance carrier did not decide to make the call until May 2010. The decrease in EBITDA resulted mainly from a $7.3 million decline in revenue, net of voyage expenses, which is attributable to fewer working days owing to the retirement of a majority of our single-hull vessels and an overall reduction in net utilization mainly relating to expiring contracts and the need to employ vessels in the spot market. Additionally, vessel operating expenses increased by $2.0 million as a result of the $1.0 million insurance call and $1.3 million of increased operating lease expenses mainly relating to sale leaseback transactions entered into in June 2009.

Net loss for the three months ended June 30, 2010 was $7.1 million, or $0.37 per fully diluted limited partner unit, excluding the write-off of goodwill and impairment charge. This represents a decrease of $9.7 million compared to net income of $2.6 million, or $0.09 per fully diluted limited partner unit, for the three months ended June 30, 2009. The decrease was primarily a result of the $8.8 million decrease in operating income. Interest expense also increased by $1.6 million resulting from increased interest margins due to the December amendment of our revolving credit facility and a term loan. Including the write-off of goodwill and the impairment charge, net loss for the three months ended June 30, 2010 was $66.5 million, or $3.43 per fully diluted limited partner unit.

Fiscal Year Ended June 30, 2010

For the fiscal year ended June 30, 2010, the Company reported operating income of $1.8 million, excluding a $54.3 million write-off of goodwill and a $12.6 million asset impairment charge on single-hull vessels and excess tugboats. This compares with $36.5 million of operating income for the fiscal year ended June 30, 2009. Including the write-off of goodwill and the asset impairment charge, the Company reported an operating loss of $65.1 million for the fiscal year ended June 30, 2010. EBITDA decreased by $34.1 million, or 38%, to $55.5 million for the fiscal year ended June 30, 2010, compared to $89.6 million for the fiscal year ended June 30, 2009. The decrease in EBITDA resulted from a $43.9 million decrease in revenue, net of voyage expenses, which as mentioned above, is attributable to fewer working days due to the retirement of a majority of our single-hull vessels and an overall reduction in net utilization directly relating to expiring contracts and having to employ vessels in the spot market. This decrease was partially offset by a $6.2 million reduction in vessel operating expenses and a $2.6 million reduction in general and administrative expenses.

Net loss for the fiscal year ended June 30, 2010 was $20.5 million, or $1.08 per fully diluted limited partner unit, excluding the write-off of goodwill and impairment charges. This represents a decrease of $34.4 million compared to net income of $13.9 million, or $0.61 per fully diluted limited partner unit, for the fiscal year ended June 30, 2009. Including the write-off of goodwill and the impairment charges, net loss for fiscal year 2010 was $87.4 million, or $4.60 per fully diluted limited partner unit.