Sunday, October 17, 2010

Hawaii Superferry’s Bankruptcy = US Navy Opportunity

A good wrap-up article:


Related Stories: Americas - USA, Corporate Financials, Events, Other Corporation, Surface Ships - Other

Hawaii Superferry
Hawaii Superferry
(click to view full)

In his April 6/09 discussion of the FY 2010 budget, Secretary of Defense Robert M. Gates said that the US military wanted to charter another 2 “JHSV-like” fast catamaran ships from 2009-2011, untilthe JHSV ships begin arriving. That meant JHSV-winner Austal would find its products competing once more with Incat, which has had 4 of its wave-piercing catamarans chartered by various American services. Their Swift wave-piercing catamaran is currently chartered by the Navy as HSV-2, just as the Austal-built Westpac Express is chartered by US Military Sealift Command for the Marines.

One obvious option was the Hawaiian Superferry catamarans, a larger pair of Austal-built ships that resemble the Westpac Express….

Hawaii Superferry
Alakai arrives
(click to view full)

Oct 10/10: The US Maritime Administration (MARAD) buys the 2 ferries for $25 million each at a US District Court auction in Norfolk, VA. MARAD was able to use its owed debts to cover the bid cost, and will now look to sell the ferries. The US Navy has expressed interest in buying them. Maritime Matters | Alabama Press-Register | Honolulu Star-Advertiser | KITV Honolulu | Virginia Pilot | Gannett’s Navy Times.

May 2010: The federal government sues to get title to the 2 vessels, in order to recoup its $150 million loan guarantees. The suit leads to the October 2010 auction.

Feb 11/10: The former Hawaii superferries Huakai and Alakai are pressed into service by the USA’s Maritime Administration (MARAD), in the wake of the disaster in Haiti. The ships are managed by Hornblower Marine Services (HMS), and the deployment is seen as an earl concept test of the similar JHSV design’s operations. Haiti’s lack of port infrastructure has not, to date, been a major problem for these ships. Maritime Executive magazine.

March 30/09: Hawaii Superferry files for Chapter 11 bankruptcy, as it reportedly has just $1 million in cash, and is facing a $2.9 million principal and interest payment on one of the ferry construction loans. MarineLog’s “Hawaii Superferry files for Chapter 11” explains the situation, and details the firm’s various creditors.

  • The US Maritime Administration (MARAD) is owed more than $135.7 million because of 2 loan guarantees under the Title XI program
  • Shipbuilder Austal USA is owed $22.9 million, as a 2nd mortgage, on construction fees
  • The state of Hawaii, which provided $40 million in harbor improvements, held the 3rd mortgage.
  • Superferry is also in default to Guggenheim Funding LLC for $51.7 million, related to a secured note in August 2007.
  • J.F. Lehman & Co., the controlling private investor in the project, put up $85.2 million of the $92.9 million issued in preferred stock. The firm was founded by former Secretary of the Navy John F. Lehman, and seems set to lose its entire investment.

Unsecured creditors listed in the bankruptcy petition are headed by:

  • The Harbors Division of State of Hawaii: disputed claim for $731,080
  • MTU: $544,653 for engine maintenance related services
  • Hornblower Marine Services: $113,685 for management fees and services
  • Austal USA: $78,198 for travel and labor for professional services

See also: Journal of Commerce.

March 16/09: The Hawaiian Superferry service is shut down, after a Hawaiian Supreme court court decision strikes down a 2007 law that allowed them to operate. The ruling effectively mandates even more environmental reviews for the service, and forces the ferries to stop operating in the mean time. Alakai had been operating between Oahu and Maui. AP.

Additional Readings

  • Maritime Professional (August 2010) – Waiting for that Ship to Come In. Joseph Keefe takes a sharp look at the Hawaii Superferry saga. [Ed. note - This is a funny, if not accurate read.]

Tuesday, October 5, 2010

Well, we're almost done here...

We're told MARAD had the winning bids of $25 million on each of the 2 Hawaii Superferries over and above what was already owed to MARAD.

Now, what does MARAD do with those 2 vessels?

Friday, October 1, 2010

Ferries went to Auction Yesterday?


Global Maritime Analysis with Joseph Keefe > September 2010
"Shopping at DOT: What’s in Your Wallet?"

...The Real End of Title XI

A regular reader of this column sent me the DOT NOTICE OF PUBLIC AUCTION links for the sale of the vessels ALAKAI and HUAKAI and then added simply via E-mail, “You can get them for a penny above what is owed. Before you start rifling through the sofa cushions for spare change, just know that Marad’s David Matsuda is on record as pledging to protect the government’s interests in the matter by matching any bid that does not equal the full amount owed. A Marad PAO confirmed that metric on Monday...

Click on the two vessel names above. They go to the classifieds placed a little more than a week ago for the auction of each of the vessels. Notice they were being auctioned separately... Waiting to hear who bought 'em and at what prices, no doubt different prices.