MATSON NAVIGATION SEEKS BUYER FOR 2 KVAERNER SHIPS

MATSON NAVIGATION SEEKS BUYER FOR 2 KVAERNER SHIPS

   Matson Navigation Co., which in 2002 signed a vessel construction contract for two new containerships with Kvaerner Shipyard Inc., said it anticipates finding a buyer for the vessels who will then charter them to Matson.

   The first of the two containerships will be completed at the end of June.

   “We don’t want to be burdened with a cost structure that our rate-payers cannot afford,” Brad Mulholland, Matson’s vice chairman, told Shipper’s News Wire on Friday.

   In a statement to Matson employees, Mulholland and Jim Andrasick, Matson’s president and chief executive officer, said “the proposed operation of the Kvaerner vessels contained many assumptions, but justification was driven primarily by operating cost savings. During a series of meetings with representatives of our offshore unions, beginning in 2001, these assumptions were discussed. However, labor costs savings vital to the project were not achieved, and the investment can no longer be financially justified.”

   Changes since the original cost model was developed “have raised the labor costs even higher. Clearly, the project to acquire and operate new ships is now even more uneconomic and can no longer be viewed as a reasonable investment,” Mulholland and Andrasick said in their statement.

   Matson had initiated the deal for the ships “with the understanding that alternatives of either vessel ownership and operation, or time charters, would remain open until delivery,” their statement said.

   “The company has determined the ships are not affordable under the present cost model, and has requested that Kvaerner seek another buyer. This allows Matson the option to time-charter the ships, which lends itself to several lower-cost crewing options,” their statement noted.

   Mulholland said on Friday the desired buyer could be a bank, a leasing company, or a ship operator. “We think the deal is very attractive because of Matson’s commitment for a long-term charter.”

   If a buyer is not found, Matson will abide by its obligations concerning the vessels. At this time, the company is deferring any signing of Title XI financing documents, Mulholland said.