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Non-Tech : Hvide Marine HMAR - High Growth, Undervalued -- Ignore unavailable to you. Want to Upgrade?

To: Robert Floyd who wrote (311)	3/19/1998 11:40:00 AM
From: Grommit	Read Replies (1) \| Respond to of 547

SHIPBUILDER SEEKS TO END PARTNERSHIP Mar-19-1998 9:50 AM, The Virginian-Pilot and The Ledger-Star, Norfolk, VA, CHRISTOPHER DINSMORE, STAFF WRITER Further severing ties to commercial shipbuilding, Newport News Shipbuilding was working Tuesday to wash its hands of an investment it made in the tankers it is building. The Peninsula shipbuilder announced Monday that it is abandoning its brief foray into commercial ship construction after more than $300 million in losses. The company decided to cut its losses and focus on its core Navy business. The shipyard said it would complete five tankers under construction by mid-1999 and cancel orders for three others. Eletson Corp., a Greek shipping company, has orders for three of the double-hulled tankers yet to be delivered. A partnership known as Hvide Van Ommeren Tankers Ltd. had ordered the remaining five. To secure the Hvide Van Ommeren order and its future as a commercial shipbuilder, Newport News Shipbuilding in 1995 invested $20 million for a 49.2 percent stake in the Hvide Van Ommeren partnership. With its involvement, the shipyard was essentially buying tankers from itself. Shipyard Chairman William Fricks at the time called it a good investment. But now, as part of abandoning commercial ship construction, the shipyard also wants to end its involvement with Hvide Van Ommeren. "As a result of the restructuring, there's going to be a fairly significant change in that partnership," said David Anderson, Newport News Shipbuilding's chief financial officer. "Our ultimate outcome will be to sell our investment." It's unclear what risk there is to the shipyard if it's unable to extricate itself from the partnership. Anderson declined to say how the sale would be achieved, suggesting a number of steps to be taken. At first, perhaps to ease the transition, Newport News Shipbuilding is increasing its stake in Hvide Van Ommeren. One of the other partners, Royal Van Ommeren N.V., a Dutch shipping company, said Tuesday that it plans to sell its 25 percent stake in the partnership to Newport News Shipbuilding for $16.6 million. That would give the Peninsula shipbuilder nearly a 75 percent stake in the partnership. A shipyard spokeswoman said the $16.6 million is included in a $150 million charge that the shipyard will take against its 1997 earnings to account for losses in the commercial program. Besides Newport News Shipbuilding and Royal Van Ommeren, the other investors in the partnership were Union Labor Life Insurance Co., an AFL-CIO affiliated firm known as ULLICO, and Fort Lauderdale-based Hvide Marine Inc. Hvide Marine, a fast-growing marine services firm, is the partnership's manager and would operate the ships when they're delivered. Because Newport News Shipbuilding canceled three of its orders, Hvide Van Ommeren is to get only two of the five tankers it had ordered. But Hvide Marine still wants five, said Jack O'Connell, a company spokesman. Hvide Marine is in talks with the yard and is also negotiating with Eletson to perhaps buy its three tankers, he said. "Whether we'll get them or not is another question," O'Connell said. Since it first became involved in the tanker order in 1995, Hvide Marine has grown dramatically. After a 1996 stock offering, it has acquired numerous fleets of work boats, offshore supply vessels and tug boats. It also owns five large chemical carriers and three petroleum tankers. With 267 ships, Hvide Marine is on track to have $320 million in revenues in 1998. Its growth could allow it to exercise an option it has to buy out Newport News Ship's investment in the partnership before 2002. (Copyright 1998)