"As is, Where is" Two Fast Ferries for Sale, Cheap?

Hot damn, when it rains it pours.

This is where we find out who benefits from them. Whoever hopes to buy them at pennies on the dollar benefits from all the other losses:

Source: http://frwebgate3.access.gpo.gov/cgi-bin/TEXTgate.cgi?WAISdocID=N2BQil%2F0%2F1%2F0&WAISaction=retrieve

[Federal Register: June 20, 2011 (Volume 76, Number 118)]

[Notices][Page 35941-35943]

From the Federal Register Online via GPO Access

[DOCID:fr20jn11-127]
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Maritime Administration

Offer for Public Sale of Two High Speed Vessels

AGENCY: Maritime Administration (MARAD),

Department of Transportation.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: MARAD is offering for public sale, on an ``as is, where is''
basis, two fast ferry vessels, ALAKAI, Official Number 1182234, and

HUAKAI, Official Number 1215902.

DATES: Bids may be submitted on or before 5 p.m. July 20, 2011.

FOR FURTHER INFORMATION CONTACT: David Heller, Office

of Shipyards and Marine Engineering, Maritime Administration,

1200 New Jersey Avenue, SE., Washington, DC 20590. Telephone:

(202) 366-1850; or e-mail David.Heller@dot.gov. Copies of this notice

may also be obtained from that office. An electronic copy of this

document may be downloaded from the Federal Register's home

page at: http://www.archives.gov and the Government Printing

Office's database at: http://www.access.gpo.gov/nara.

SUPPLEMENTARY INFORMATION: The Maritime Administration

(``MARAD''), an agency of the U.S. Department of Transportation,

is offering for public sale, on an ``as is, where is'' basis, two fast ferry

vessels, ALAKAI, Official Number 1182234, and HUAKAI, Official

Number 1215902 (each a ``Vessel'' and collectively, the ``Vessels'').

MARAD will warrant title to the Vessels and convey title free and

clear of all liens. The Vessels were previously owned by Hawaii

Superferry LLC and MARAD has obtained title through foreclosure.

The Vessels were built in Mobile, AL by Austal USA and are currently

berthed at Lambert's Point Dock, Norfolk, VA. Specifications for the

Vessels are set forth at the end of this notice (no guarantee or warranty

as to specifications is made by MARAD).

All bids must contain specific information on the offer price, details of

any financing for the purchase of the Vessels, timing of the closing of

the proposed transaction, affidavit stating that the bidder is not

affiliated with the former owner, Hawaii Superferry LLC, or any of its

officers, directors or significant equity owners, and any contigencies

that could affect the closing of the transaction. Bidders may be either

U.S. citizens or foreign citizens. However, because the Vessels are U.S.

flagged, any bidder who is a foreign citizen must be prepared to comply

promptly with the provisions of 46 U.S.C. 56101 and MARAD's

implementing regulations. Responsive and successful bids should

include the following components: (1) Purchase of both Vessels

(MARAD only will consider an offer for sale of a single Vessel if

concurrent sale of both Vessels to separate buyers can be arranged),

(2) monthly reimbursement of any lay-up costs for the Vessels between

the execution of a sale contract and closing of the sale, (3) purchase of

the Vessels on an ``as is, where is'' basis with MARAD only required to

warrant title to the Vessels and that they are free and clear of liens, and

(4) cash sale or owner-procured financing (proposals with MARAD

financing of the Vessels will not be considered).

The successful bidder will be required to submit a $500,000 deposit

for each Vessel. Deposits must be made by wire transfer or in the form

of a certified check, drawn on a U.S. bank and made payable to MARAD,

within five business days of the bidder being advised that its bid is
approved by the Maritime Administrator. The successful bid will be

considered non-responsive if the bid deposit is not received in the

required five business day time frame. The deposit is nonrefundable.

No interest will be paid on the deposit. The successful bidder's deposit

will be credited toward the bid offer. The successful bidder may not

assign its right to the Vessel without consent of MARAD.

The successful bidder will be required to sign the MARAD form vessel

sale contract that, among other provisions, incorporates all of the

requirements set forth in this notice.

MARAD reserves the right to reject any and all bids and to seek

additional bids from the bidders and any other interested parties.

Arrangements to inspect the Vessel must be made through MARAD.

All inspections will be at the bidder's own risk and expense. For

additional information or to arrange an inspection, please contact

Mr. David Heller at (202) 366-1850 or david.heller@dot.gov. Bids

and affidavits must be submitted by overnight courier to the Maritime

Administration, Office of Marine Financing, 1200 New Jersey Ave., SE.,

Room W23-432, Washington, DC 20590, Attention: Mr. Daniel Ladd,

by 5 p.m. 30 days from date of publication of this notice.

------------------------------------------------------------------------

By Order of the Maritime Administrator.

Dated: June 14, 2011.

Murray Bloom,
Acting Secretary, Maritime Administration.
[FR Doc. 2011-15147 Filed 6-17-11; 8:45 am]
BILLING CODE 4910-81-P

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?

What are the Hawaii Superferries Worth?

There is a new KITV report on a MARAD official's statements yesterday in Honolulu on the expected auction of the two Hawaii Superferries here and here. In those reports the MARAD official is quoted as saying the lien that MARAD has on the vessels is a total of $150 million. The report further quotes,

"'I can tell you we already have a $150 million lien on both ships. So, you can of course, provide a cash bid higher than that amount and take ownership of both the Alakai and the Huakai,' said Matsuda. Matsuda was in Honolulu Friday for the groundbreaking ceremony for the renovation of the Pier 29 container yard at Honolulu Harbor. The project is funded with federal stimulus money. Matsuda said Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Hold that thought.

You can look a number of places to try to find what the two Superferries actually cost to build including all the nice extras in the interiors and things added later like the Whale detection systems to the Alakai and the ramp, wastewater treatment, and desalination plants added to the Huakai. A simple place to look is Wikipedia which says each vessel's total costs were $88 million each, here and here. Of course that's just Wikipedia and the Huakai's costs were at least $5 million more than the Alakai. But a quick thumbnail estimate is that the combined cost for the two was at least $181 million new before depreciation. Hold that thought.

Now, it took a little bit of hunting but we went back and looked at some of the early Bankruptcy Court filings, and it looks like the outstanding senior lien that MARAD has on the two vessels is actually closer to $140 million, not $150 million. Additionally Guggenheim Corporate Funding, LLC has a lesser priority outstanding lien of about $48 million and Austal had an even lower priority lien of about $22 million. The State of Hawaii was junior to them. Austal wrote off their loan as a loss. Guggenheim's lien was "secured" in equity. It is understood that all equity holders would lose their money on this. So the key takeaway on the liens is that MARAD's is $140 million, not $150 million and that Guggenheim also has a lien and would be out $48 million. The total of those two adds up to $188 million, only slightly more than what the two vessels originally cost to build. Hold that thought.

Now, let's got back to that MARAD official's quote about $150 million. First of all, does MARAD determine and run the auction? NO, they do NOT. It is the Bankruptcy Court that does that. The MARAD official's comment, "So, you can of course, provide a cash bid higher than that amount ('$150 million') and take ownership of both the Alakai and the Huakai,' said Matsuda," is not something that MARAD will determine and is misleading. First of all, MARAD's outstanding lien is $140 million, and NOT $150 million and more importantly because these ships are possibly worth closer to $180 million than $150 million, but also because it is not for MARAD to say what exact dollar figure will be enough to take ownership of the two vessels, that's the purvue of the Bankruptcy Court.

So, what are these ships worth? Well, it's somewhere between $150 and $180. They have a tax depreciable life of at least 20 years, even though the Huakai is almost like brand new and should not be depreciated as much as the Alakai. The Alakai, if you will remember, had significant damage to the rudder, was run aground going into drydock, and fell off it's blocks in drydock. But, if they were both actually being used continuously over the past 2 to 3 years, then the total depreciation on $180 million would be about $4.5 million for the Huakai and about $13.5 million for the Alakai for a total of about $18 million off of $180 million equaling about $162 million, which is about what these two vessels are really worth, leaving $140 million for MARAD, not $150 million, and the other $22 million for Guggenheim, recovering almost half of their potential loss. Keep in mind, to build these brand new for commercial use would be at least $90 million each and also the builder Austal is being paid about $180 million to build just one of these very similar ships for the U.S. military as JHSV's.

Our conclusion is then that these two vessels together are worth no less than $160 million total. Their actual worth is probably a little more than that. We would expect Guggenheim to be a bidder on this in addition to MARAD. We believe MARAD will actually be satisfied to recover their $140 million, but we also believe MARAD when they say the, "Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Now, let's see if somebody gets 'em for less than that?

By the way, Mufi, your cheap friends aren't in the running.

New Revelations about MARAD and Superferry

Two new articles yesterday with previously unreported information by a Ryan Sibley of the Sunlight Foundation Reporting Group:

From: http://reporting.sunlightfoundation.com/2010/government-agency-history-taxpayer-losses-keeps-it/

"Government agency with a history of taxpayer losses keeps at it"
By Ryan Sibley Apr 12, 2010

Between 2004 and 2009, the U.S. Maritime Administration, or MARAD, a federal agency that supports the U.S. shipbuilding industry and merchant marine, made just one loan from its troubled Federal Ship Financing Program, also known as Title XI. The borrower was Hawaii Superferry Inc., a politically connected company that hired a former chief counsel and deputy administrator of MARAD, among others, to lobby the agency. In 2005, Hawaii Superferry got a taxpayer-guaranteed loan for $139 million to build and operate a pair of high-speed ferries in the fiftieth state. Just four years later, the company filed for bankruptcy, listing assets of a mere $1 million.

The failure was par for the course for a program that even the business-friendly administration of George W. Bush branded as an “unwarranted corporate subsidy.”...

Loan guarantees issued by Title XI slowed drastically in years following the default of American Classic Voyages. Hawaii Superferry received the only guarantee issued in 2005 and the last one until 2009. Disclosure records show the company lobbied Congress and MARAD in 2005 regarding ship financing and Title XI amid the program slow down.

The company hired Blank Rome LLP to push its interests in Washington; among the firm’s lobbyists that represented Hawaii Superferry was Joan Bondareff , who served as chief counsel and acting deputy administrator for MARAD during the Clinton administration . She’d also served as the majority counsel to the House Committee on Merchant Marine and Fisheries. Blank Rome reported receiving $20,000 in fees from Hawaii Superferry in 2005; the company got a taxpayer-guaranteed loan for $139 million to pay for construction and operation of a pair of high-tech catamarans... >>>Rest of Article>>>


Also from: http://reporting.sunlightfoundation.com/2010/hawaii-superferry-ulterior-motive/

"Hawaii Superferry: An ulterior motive?"
By Ryan Sibley Apr 12, 2010

Was the Hawaii Superferry project conceived of as a means of securing a military contract? Speculation in Hawaii among activists that the ferries might have eventually been used for interisland transport of the Army’s Stryker brigade and other military equipment fueled conflict between protestors and Superferry supporters.

In March 2005, John F. Lehman, a former Navy Secretary during the Reagan administration and the company's principal investor, told Pacific Business News that there was a possibility the ferries would be used to move military cargo. In 2008, the former CEO and President of HSF, Inc., Thomas Fargo, said that was still a possibility, and the company’s lobbyists at Blank Rome LLP reported being paid $210,000, according to data from the Center for Responsive Politics, to lobby for inclusion in a Defense Department program that would pay to have improvements made to the Hawaii Superferry’s two high speed catamarans that would make them more militarily useful... >>>Rest of Article>>>

HMS Haiti and Never before seen pictures of the Huakai

From Timothy Dick today, founder of HSF:

http://www.hmshaiti.com/

Also, never before seen pictures of the Huakai:

http://www.flickr.com/photos/hms-corp/

Video: Current Harbor and Ferry Operations in Haiti:
http://bit.ly/7At07M

STILL! correcting the record...

From: Downturn offers opportunity, Lingle says
Honolulu Advertiser - By CHRIS HAMILTON The Maui News September 5, 2009
...Luncheon emcee Ron Vaught asked Lingle about the status of Superferry...

Re: "...The two completed ferries now sit at a shipyard in Maryland. Lingle said she's been in recent contact with the ferries' builder, Austal, which is considering military contracts for the high-speed vehicle transports. In the meantime, the state will "carry on" and work to complete the required environmental impact statement. Superferry was good for business, and the majority of people wanted it, she said."

My comment:

9/5/09 -- Last reported the ferries were in Virginia, not Maryland. Austal has no interest in the ferries anymore. It makes no sense that Lingle would be talking with Austal about the Superferries. MARAD is the one considering military use for the vessels. Regardless, a Chapter 343 EIS has to be completed and accepted before any large high speed vessel can operate in Hawaiian waters, regardless of its owner or user. About being good for business, that is a good question for all of the unsecured creditors (small businesses in Hawaii) and common stockholders of the bankrupt entity.

9/7/09 -- Thought of one reason for the State to talk with Austal, to try to find a buyer for the ramp barges.

State Startin' to Look Like the Odd One Out on This

From: http://www.netdocketsblog.com/2009/06/hawaii-superferry-challenges-transfer.html

Monday, June 29, 2009

Hawaii Superferry Challenges Transfer Motion

On Monday, Hawaii Superferry, Inc. and HSF Holding, Inc. filed an objection, accompanied by a memorandum of law, to the motion of the State of Hawaii seeking the transfer of their bankruptcy cases from the bankruptcy court in Delaware to the bankruptcy court in Hawaii. Hawaii Superferry filed for bankruptcy protection in Delaware on May 30, 2009 and the State of Hawaii sought the transfer on June 19th. Details of the State of Hawaii's transfer motion can be found in an earlier posting, which is available here.

In support of its objection, Hawaii Superferry makes several arguments. First, the company asserts that venue is proper in Delaware because HSF Holding, Inc. was formed as a corporation under Delaware law. Second, the company states that its two largest secured creditors - the United States Maritime Administration and Guggenheim Corporate Funding, LLC - support the cases remaining in the Delaware bankruptcy court. In fact, the United States Maritime Administration quickly filed a joinder in support of Hawaii Superferry's objection. The objection also notes that MARAD holds a secured claim in excess of $136 million and Guggenheim holds a secured claim of $50 million, while the State of Hawaii asserts a disputed third-lien claim of only $1.3 million. The objection suggests that such third-lien claims are likely to be out of the money.

Finally, Hawaii Superferry challenges the assertions made by the State of Hawaii that there is a strong connection between the companies and the State of Hawaii. While that may once have been the case, according to Hawaii Superferry, the companies have ceased all operations in Hawaii and no longer maintain any significant connection to Hawaii. According to the companies, they ceased all operations in Hawaii in March following an adverse court ruling that prohibited their continuing operation, they have laid off all employees in Hawaii and none of their assets remain in Hawaii (most notably, their most significant assets - the high-speed ferries - are now docked in Alabama). Hawaii Superferry also challenges the assertion that most of its creditors are located in Hawaii, noting that less than half of its 30 largest unsecured creditors (and two of the three members of the Official Committee of Unsecured Creditors) are located outside of Hawaii. Finally, the company notes that both its retained professionals and the Creditors' Committee's retained professionals are located in Philadelphia, New York, Washington, D.C., and Wilmington.

Download copies of every document filed in this case and the bankruptcy cases of over 600 other major corporations using netDockets.

Posted by Randall Reese

Two good blog posts on Hawaii Superferry and Austal

I added my comments to their timely, good blog posts:

Springbored's Springboard: First Shipbuilding Contract Of The Mabus/Work Era?
By Springbored
The U.S. Navy awarded Austal a $99.5 million contract add-on Friday to order long lead-time materials for its third and fourth Joint High Speed Vessels, military transport ships that are part of a potential $1.6 billion, ... Springbored's Springboard - http://springboarder.blogspot.com/

Disappeared News: US Maritime Administration reported moving to seize two Hawaii Superferries
By Larry Geller
[Austal] chief executive Bob Browning said yesterday talks with the US Maritime Administration, which ranks above Austal as a secured creditor of Superferry, had “come unstuck” in the past 24 hours. It is understood the USMA, ... Disappeared News - http://disappearednews.com/

My Comment to Larry's blog:
If Austal bought them for the outstanding load value, it would be at a discount. They could resell them and recoup their losses, but it would tie up $135 million for as much as a year.

If Lehman were allowed to buy them and lease them to the military, he could get both of them at a discount of $135 million and begin to recoup some of the losses he had with HSF.

If the DoD bought them at $135 million, starts using the Huakai in the short-term and the Alakai by the end of the year after retrofit, they would be getting them at a steal, for $75 to 80 million each, considering they are prepared to shell out $185 million for just one JHSV from Austal.

I think the most likely buyer is the DoD, or MARAD just pays off the bonds and leases them to the military.

If these vessels are attempted to be deployed commercially, it would need to be on routes of 30 to 75 miles to have a chance at viability. It is much more likely that they would be useful militarily rather than commercially... as was always the case. posted by MauiBrad : 4:43 PM HST

Recent Headlines on HSF's Bankruptcy and Austal

Creditors criticize Superferry plan Hawaii Business Starbulletin.com June 19, 2009
Hawaii Superferry filed a motion in federal Bankruptcy Court last week seeking approval ... The Superferry cited a lack of liquidity and costs for insurance ...

Austal awarded $99.5 million for LLTM for second and third JHSV's June 19, 2009
Marine Log - New York, NY, USA
The LLTM procured or manufactured for construction or installation in JHSV 2 and 3 will be subsumed with their associated costs into their respective ship ...

Austal cops US $11m Hawaii hit June 20, 2009
The West Australian - Perth, Australia
Listed shipbuilder Austal will take a $US11 million ($13.85 million) hit to its 2008-09 bottom line after rescue talks with the major secured creditor of collapsed customer Hawaii Superferry broke down at the last minute...

Business briefs June 20, 2009
Honolulu Star-Bulletin - Honolulu, HI, USA
"Superferry builder writes off loans"
Australia-based Austal Ltd., whose US subsidiary built the two Hawaii Superferry ships in Mobile, Ala., said yesterday it now will write off the entire $23 ...

Austal set to take $23 million hit on Hawaii Superferries June 21, 2009
Marine Log - New York, NY, USA
Hawaii Superferry is seeking to literally abandon ship (or in this case ships). As a result shipbuilder Austal is set to take a $23 million hit. ...

Couple more blog entries to be referenced in my next post.

"Conspiracy Ferry: Did we get taken for a ride by Hawai‘i Superferry?"

Another very good article by NYT's freelance reporter Chris Pala:

From: http://honoluluweekly.com/feature/2009/03/conspiracy-ferry/

Conspiracy Ferry:

Did we get taken for a ride by Hawai‘i Superferry?

Christopher Pala
Mar 25, 2009

---

Hawai‘i’s Superferry ended its choppy ride last week, leaving tantalizing clues, but no proof, that the whole venture was about more than providing “reliable commercial service in these islands,” as CEO Thomas B. Fargo insisted at his dawn press conference.

“You look at the players involved, you have to question their motives, there are some pretty significant defense contracts involved,” said Rep. Hermina Morita, who chairs the House Energy and Environmental Protection Committee.

The defense contracts come in two categories.

First, the construction of the two ferries by Austal USA helped the young company get a contract to build a military version of the fast cargo and troop-transport ship—with an option for nine others—for a total of $1.6 billion, according to defense analysts and Austal USA itself. It also played a role in getting a contract for a Littoral Combat Ship prototype, a separate project to build up to 50 fast, aluminum warships at more than twice the price for each. The question is: was that the real purpose of building the Superferry?

Second, there are the ferries themselves. Now that the Hawai‘i Supreme Court has freed them of any obligation to serve the Islands, which has proved to be a money-losing operation, are they going to fetch a better price elsewhere? If they do, was that the main point for building them and bringing them here?

Austal and INCAT are the two giants of the big, fast aluminum catamaran business that have been supplying the world market for decades from their shipyards in Australia. Unlike most countries, the United States can’t buy foreign vessels for internal or military use: the Jones Act specifies they must be built domestically. So to crack the American market, Austal and INCAT needed to set up shipyards in the United States. Austal USA set up shop in Mobile, Ala., in 2001 and INCAT partnered with Bollinger Shipyards, Inc. in South Lockport, La., both with their eye on a contract for a military version of the Superferry.

By the summer of 2004, when work started on the first Superferry, Austal USA had built eight ships, all smaller than the Superferry. “Bollinger/Incat [USA] was a credible threat,” Bill Pfister, VP for external relations at Austal USA, said in a telephone interview from Mobile. “Building the Superferry was very helpful in demonstrating that we can build these ships in the United States as well as Australia, it was a major part of our credibility, almost a prerequisite,” he said. “It allowed us to build up the work force and the facilities.” Once the first Superferry was finished, that work force moved to the Littoral Combat Ship prototype, he said. And last November, as work was ending on the second Superferry, the Huakai, Austal beat Bollinger/Incat USA for the contract for the military version of the Superferry, called the Joint High Speed Vessel—essentially a Superferry with a helipad in the back.

In an interview together last year, Tig Krekel, vice chairman and partner of J.F. Lehman & Company, an investment bank in New York, and John Garibaldi, a former Hawaiian and Aloha Airlines executive who was CEO of Hawai‘i Superferry when it launched service, described how Garibaldi, Tim Dick and Terry White started the project together, financing it out of their savings until early 2004, when they raised $3.3 million. In September 2004, Lehman & Company took over the company and its principal, John F. Lehman, signed a deal to provide $85 million for the first Superferry.

“The ship started being built in summer of ’04, basically on spec,” Garibaldi said. “It was done on verbal assurances from Lehman and me that we would not leave them with the ship.” By the fall of 2005, Krekel said, Lehman was chairman of the board and the Maritime Administration was ready to guarantee $140 million of the $185 million loan.

Garibaldi said the shipyard had started building the ship “on spec” because the project’s financial success was so obvious “it was a no-brainer.” Krekel added, “We expect service to grow to five ships, the market’s there.”

But Alan Lerchbacker, the founding CEO of Austal USA, painted a different picture in an interview in Honolulu with Pacific Business News published on January 19, 2007, the same week Hawai‘i Superferry took delivery of the Alakai.

“I just worry about getting enough business to cover costs because of the sheer size of it,” he was quoted as saying. “They may need 400 to 500 passengers to break even.” Indeed, Hawai‘i Superferry executives had said the financial break-even point lay at 50 percent capacity, or 143 cars and 433 passengers, which the Superferry rarely attained.

Lerchbacker said he had suggested a 220-foot vessel, but the company chose the 326-foot model–and then another one of 344 feet.

Still unclear is whether Austal started building the Alakea “on spec” because it was the perfect way to prove its mettle to the military procurement community or because it believed that whatever the Hawai‘i plan’s merit, the ship itself would be attractive to the military. Also opaque is J.F. Lehman & Co.’s financial interest in Austal’s success. Atlantic Marine, which the company purchased recently and has a shipyard that adjoins Austal’s in Mobile, works with steel ships and “has no connection to Austal,” said Tim Colton, a shipping analyst in Florida.

The second kind of military contract that may be involved has to do with what would happen if the Superferries fail in their mission to make money in Hawai‘i or are prevented from operating by the courts.

On Thursday, Superferry CEO Fargo said, “We’re going to have to go out and find other employment for Alakai.” He added, “There are other ferry operations that would like to expand their service. Certainly the military may very well want to lease this particular ship.”

In July, BYM Marine and Maritime News reported, “Austal was recently awarded a new contract to provide additional features and equipment on the second Hawaii Superferry to facilitate its use by the military. This follows on from the long-term charter, since 2001, of the Austal-built 308-foot vehicle-passenger catamaran WestPac Express by the III Marine Expeditionary Force based on Okinawa, Japan.”

Pfister, the Austal vice-president, sidestepped in an e-mail exchange the question of whether a contract had been signed with the military to lease the Huakai. He explained that modification in question is a ramp that allows the ship to discharge cargo pretty much anywhere. It’s not usually used in civilian service because it’s heavy and cuts the number of cars by about 20 to 25, he wrote.

Lori Abe, a spokeswoman for Hawai‘i Superferry, said the ramp was added for use in the Big Island and that BYM is wrong.

Loren Thompson of the Lexington Institute in Arlington, Va., said leasing the superferries to the military would be difficult to pull off. “Leasing military equipment is not popular in Congress,” he said. Another analyst, who asked to remain anonymous, added: “Tolerance for leasing rather than buying ran out. Another lease now could be a hard sell.”

But Colton, the analyst, said that if anyone can pull it off, it’s Lehman. The Navy secretary in the entire Reagan administration who famously advocated a 600-ship navy (from about 500) was a major adviser and fund-raiser for John McCain and was seen as his likely his chief of staff. “He’s much better positioned than anyone else to get these boats leased,” Colton said.

While we may never learn what interest Lehman had in helping Austal get the military contracts, the value of the two civilian superferries should soon become apparent.

If Lehman fails to lease them out and stops servicing the loan, the federal maritime administration, the loan’s guarantor, would have to take over the ships and likely sell them to the Navy. That could trigger headlines like “Feds Bail Out Another Well-Connected Fatcat.”

And there would be some irony in Obama’s Navy bailing out one of his most powerful opponents.