April 14, 2005

Mulholland to head new Kvaerner unit

In parallel with the 10 ship build and bareboat deal with OSG announced earlier today, Kvaerner also announced the formation of the new wholly-owned, U.S.-based subsidiary that will own the ships.

The news came at a ceremonial contract-signing at the yard attended by more than 1,000 workers, customers, suppliers, and friends of the Yard, including former President Bill Clinton, who served as the keynote speaker.

"I never lost faith in the American shipbuilding industry and neither did so many of our public servants, workers and private businesses," said President Clinton, who in 1993 signed into law the National Shipbuiding Initiative. "I salute the men and women of Kvaerner Philadelphia Shipyard for showing all of us once again that it is possible to achieve great things even in the face of seemingly impossible odds. Today's announcement is good news for the workers here, for America's maritime industry and for the environment."

Also taking part in the ceremonies were Pennsylvania Governor Ed Rendell, Philadelphia Mayor John F. Street, U.S. Representative Curt Weldon, and numerous other local, state, and federal government officials.

Announcements included:

  • Kick off the, five-year, 10-ship (plus an option for two additional vessels), Product Tanker Program, believed to be the largest of its kind in American commercial shipbuilding. The shipbuilding order is worth around $1 billion to the yard, with the deal with OSG being worth about $500 million. The design for the products tankers is being provided under an agreement with Hyundai Mipo Dockyard. The program calls for the first delivery in 2006 and order completion by 2010.
  • Formation of ASC (American Shipping, Inc.) as part of Kvaerner ASA. ASC will in turn own KPSI and charter the new tankers to domestic customers, including major oil and chemical producers and suppliers. Brad Mulholland, the former President of Matson Navigation Company, Inc is serving as CEO of the new subsidiary. Mulholland said the new, MT-46 Veteran Class, 46,000 dwt tankers will be among the most efficient tankers ever built
  • ASC's first new customer, pending the approval of both company boards of directors, is OSG, the second largest publicly listed tanker owner in the world (measured by number of vessels.) Its fleet totals 99 and with this charter, it would be doubling the size of its Jones Act fleet.

  • Also announced this morning was the start of construction of a new permanent office building on the KPSI site replacing temporary trailer offices the company has occupied since acquiring the facility in 1997.
  • "I am proud to be able to show how well the people at the yard have stood up to the challenge of turning this Navy yard into the most competitive yard in the Jones Act market," said Kjell Inge Roekke, President & CEO of Kv¾rner ASA and its principal shareholder. "Based on the foundation of bold political decisions in the 1990s, a committed work force now produces great ships, built efficiently and with love and care. I lived and worked in the United States for 15 years, and I know this is a can-do country. We have proven that we are the can-do shipyard in the United States."

    Also announced this morning was the start of construction of a new permanent office building on the KPSI site replacing temporary trailer offices the company has occupied since acquiring the facility in 1997.

    "The proposed bareboat charters of ten newbuild Jones Act product tankers by subsidiaries of OSG represent a significant commitment," said Morten Arntzen, President & CEO of OSG. "For the Jones Act fleet to grow, it will require yards like KPSI and shipping companies like OSG that are committed to quality and willing to think and act creatively and boldly. The ten ship program is OSG's first giant step to building a world-class U.S. flag shipping business."

    David Meehan, Kvaerner Philadelphia's CEO, and a Pennsylvania native, said, "This is a proud moment for us as a company that is building the highest quality ships our nation's maritime economy depends on.".

    Meehan added that while performance and productivity are continually improving, the KPSI team recognizes it is in a fiercely competitive market place. "In this business you are only as good as the next ship you build so we strive for continuous improvement in every area, from productivity to profitability."

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