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OVERSEAS CASCADE

December 15, 2009

OSG, Aker Philly and American Shipping settle dispute

Overseas Shipholding Group, Inc. (OSG) has entered into a settlement agreement with American Shipping Company ASA , Aker Philadelphia Shipyard ASA, and Aker Philadelphia Shipyard, Inc. that settles all outstanding commercial disputes between OSG and the other parties. It also provides for modifications to other existing agreements among AMSC and OSG, including eliminating restrictions on OSG's ability to purchase Jones Act product tankers, changes to the profit sharing agreement as well as providing vessel purchase rights under specific conditions. The settlement agreement has received all necessary third party approvals as well as approval from the U.S. Coast Guard.

In connection with the agreement, OSG will purchase two Handysize product carriers, the Overseas Cascade and Hull 015 (TBN Overseas Chinook) for approximately $115 million per vessel. OSG has bareboat chartered the previous Aker Philadelphia tanker newbuilds it operates from AMSC.

The Overseas Cascade was delivered to OSG simultaneously with announcement of the settlement.

The Overseas Cascade and TBN Overseas Chinook will be converted to shuttle tankers--though not at Aker Philadelphia--and have been chartered out to Petrobras America, Inc. (Petrobras). Following conversion work, the vessels are expected to deliver to Petrobras in the second quarters of 2010 and 2011, respectively. The shuttle tankers will transport oil from Petrobras' FPSO (Floating Production Storage and Offloading) facilities located in the Cascade and Chinook ultra-deepwater fields in the U.S. Gulf of Mexico.

Of APSI's 12 ship newbuild program with OSG, eight vessels have been delivered and four additional vessels deliver through 2011.

Aker Philadelphia says the agreements provide for the resolution of certain issues facing it, including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program for American Shipping announced in 2005. As part of the agreements, the shipyard will sell the two shuttle tankers in this twelve ship build program (AKPS Hulls 015 and 016) directly to OSG companies to resolve American Shipping's previously disclosed challenges in financing these vessels. With the settlement agreements, Aker Philadelphia will resume drawing on its construction period financing facility.

Also as part of the agreements, exclusivity between AKPS and OSG and AMSC for tanker construction has been eliminated allowing the the shipyards to pursue opportunities with any interested parties. AKPS and AMSC have agreed to cancel AMSC's options for tankers beyond AKPS Hull 20.

Aker Philadelphia says that as part of the settlement agreements, total revenues on the existing shipbuilding contracts with AMSC will be reduced by $9.7 million. Because revenues under the contract are based upon the contract progress to date, revenues and operating profit will be reduced in the fourth quarter by approximately $7.4 million. After the earnings adjustment, says Aker Philadelphia, it is "still on plan to maintain its previously provided earnings guidance regarding the tanker project."


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