THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Wednesday, January 31, 1996 TAG: 9601310381
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TIM SHORROCK, THE JOURNAL OF COMMERCE
LENGTH: Medium: 68 lines
Newport News Shipbuilding will pump $20 million into a deal to build five petroleum product tankers at the shipyard.
The shipyard is one of four investors in Hvide Van Ommeren Tankers Ltd. The deal includes two shipping companies and a union-owned life insurance company with ties to American maritime labor groups.
Hvide Van Ommeren expects to hear from the U.S. Maritime Administration this week whether its application for $240 million in loan guarantees to build the tankers has been approved. The shipbuilding contract is contingent on the guarantees.
``We have our fingers crossed, and expect to hear something this week,'' said Erik Hvide, chairman of the board and chief executive officer of Hvide Marine Inc. The Fort Lauderdale, Fla., company is investing $1 million and will be the general partner and manager of Hvide Van Ommeren.
Under the contract between Hvide Van Ommeren and Newport News Shipbuilding, the partnership holds an option to build up to 10 45,000-ton double-hulled tankers. The ships will carry petroleum products on U.S. coastal routes protected by the Jones Act, which requires U.S. vessels to ship goods between U.S. ports.
``I think it's a done deal,'' said John Love, marine superintendent and general counsel for Van Ommeren Shipping (USA) Inc., which will hold a 25 percent or $10 million stake in the $40 million partnership.
Union Labor Life Insurance Co., which is owned by labor unions, is investing $8 million in the partnership. As part of the arrangement between Union Labor Life Insurance Co., known as Ullico, and Hvide Van Ommeren, the crews on the tankers will be represented by the American Maritime Officers and the Seafarers International Union.
``It's always a condition that our investments have a positive impact on union jobs, either preserving them or creating them,'' said Michael R. Steed, Ullico's senior vice president for investment services.
This investment will support more than 18,000 unionized shipyard jobs at Newport News and 150 to 200 seafaring jobs when the tankers are built, Steed said.
When built, the tankers will be managed by Inter-Ocean Ugland Management Corp., which holds labor contracts with the AMO and SIU.
The AMO and SIU, which represent about 4,000 deck officers and 10,000 unlicensed seafarers, are separate organizations but operate as a single team in most of their dealings with the shipping industry.
Hvide Van Ommeren is a limited liability company formed by Van Ommeren Shipping, holding 25 percent, and Hvide Partners L.P., holding 75 percent of the shares. Hvide Partners itself is a limited partnership of Ullico-Hvide (33.66 percent), Newport News Shipbuilding (65.34 percent) and Hvide Marine (1 percent).
The deal continues to rankle Kirby Marine Transportation Corp., a Houston shipping company that controls 15 percent of the domestic tanker market. Earlier this month, Kirby unsuccessfully sought an order from U.S. District Judge Harold Greene to block the Maritime Administration from approving the Hvide-Van Ommeren deal and another application involving tankers.
Kirby argues that both deals are speculative and will unduly risk taxpayer money by adding unneeded tonnage to the Jones Act product tanker market. Kirby owns and operates eight tankers and two tank-barges.
John Swank, the Maritime Administration's chief spokesman, said projects must meet the agency's due diligence and other statutory requirements to get approval for the loan guarantees, which assure low interest rates to finance the shipbuilding up to 25 years. by CNB