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Aker Philly facing higher costs, delivery delays

The company, which is planning to change its name to Philly Shipyard, reported an order backlog of $1,043.2 million as of September 30, 2015, providing for shipbuilding activity with delivery dates through 2018.

In its third quarter report, the company says that it has recently completed a thorough analysis of its production schedule and budgets based on its experiences with the construction activities on the current product tanker program and the purchasing and engineering activities on the two containership’s on order by Matson project.

“As a result of this analysis,” it says, it has “prepared a revised forecast which includes higher costs of construction and later delivery dates for the vessels in AKPS’s backlog than previous forecasts. Corrective actions have been put in place to address some of these additional costs and schedule impacts.”

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Marathon buys Aker Philly interest in four newbuilds

 

This follows last month’s news that Kinder Morgan, Inc. (NYSE: KMI) had agreed the four Jones Act tankers building for the shipyard’s wholly-owned U.S. subsidiary, Philly Tankers LLC.

Marathon’s buy-out of APSI’s interest in the Crowley joint venture with respect to each vessel will occur on its delivery from the shipyard. Deliveries of all four vessels are expected to occur from Q3 2015 to Q3 2016. APSI expects to recognize a pre-tax gain of approximately $10 million per vessel from the transaction.

APSI will make an investment in the vessels during their construction, but will no longer maintain the previously planned long-term investment in the vessels post-delivery, which was expected to be approximately $110 million in the aggregate.

“This transaction is an important part of AKPS’s plan to divest its shipping investments and realize the value created for shareholders,” said Kristian Rokke, Chairman of AKPS. “We are proud of what we have accomplished together with Crowley under the joint-venture and look forward to serving both Crowley and Marathon Petroleum as shipbuilders into the future.”

All four of the vessels subject to the transaction are under construction. APSI has also begun construction of the first two of four additional 50,000 dwt tankers for a subsidiary of Kinder Morgan, Inc., which are planned to be delivered between November 2016 and November 2017.

The shipyard also has contracts for two 3,600 TEU containerships for Matson Navigation Company, Inc., which are planned to be delivered in 2018.

On July 16, 2015, the company announced that it intends to change its name to Philly Shipyard by the end of the year, pending shareholder approval.