Rand Logistics, Inc. (Nasdaq:RLOG) reports that it has acquired two Jones Act compliant, self-unloading integrated tug/barge units from KK Integrated Shipping (KKIS). The acquisition was structured with $35.5 million cash paid at closing (including $31.0 million financed with third party debt), $5.1 million of attractively priced junior seller paper and 1,305,963 shares of the Company’s common stock.
So, what did Rand Logistics get for its money? KK Integrated Logistics still has the data on the pair on its website, which describes them as “two innovative, self-unloading, articulated tug barges (ATBs) servicing bulk terminals around the Great Lakes.”
The two barges originally started life as steamships. The barge currently named the Lewis J Kuber was built in 1952 by Bethlehem Steel in Cleveland, Ohio, as the Sparrows Point and after a long and interesting history was converted to its present configuration at Erie Shipbuilding, Erie, Pa., in September 2006. It is paired with the tug, Olive Moore, which was originally launched in 1928, as the John F. Cushing, by Manitowoc Ship Building Inc. of Manitowoc, Wis. To equip it for its role as an articulated tug, a Hydraconn connector was installed, the pilothouse was raised to allow for proper sight-of-eye over the self-unloading equipment of the barge, and additional staterooms were built.
The James L. Kuber was originally built in 1953 as a steamship at Great Lakes Engineering Works, River Rouge, Mich., for Oglebay Norton Co. and in 1982 w asconverted from a straight deck bulk carrier to a self-unloader at Bay Shipbuilding, Sturgeon Bay, Wis..The Reserve was sold to an affiliate of KK Integrated Shipping in 2006 and made its last voyage as a powered self-unloader in 2007, when it was converted to an articulated barge. It is paired with the Tug Victory, originally launched in April 1981. KK Integrated Shipping purchased the Victory in 2006 and converted it to an articulated tug with the installation of a Hydraconn system and a heightened pilot house.
Laurence S. Levy, Chairman and CEO of Rand, stated, “We are very enthusiastic about this highly strategic acquisition and expect that it will result in an additional $0.25 to $0.30 in free cash flow per common share for our fiscal year ending March 31, 2012.”
Scott Bravener, President of Lower Lakes, commented, “The acquisition of these vessels allows us to expand our fleet at a price well below replacement cost, improve the profitability of our existing fleet by better aligning our assets to the trade patterns that they are best suited for and provides for greater flexibility in the scheduling of our vessels. Given our current order book as well as additional customer demand expected in connection with the acquisition, the two vessels are fully booked for the upcoming sailing season. In addition, as a result of this acquisition we have elected to defer a drydocking and major capital expenditure program planned for this winter for our smallest, oldest and least profitable vessel. The continued growth of our company enhances our competitive position as a leading provider of bulk freight shipping services throughout the Great Lakes region and illustrates our long-term commitment to our customers, employees and shareholders.”
February 14, 2011