FARRELL APPLIES TO TRANSFER SUBSIDY AGREEMENTS TO FLI SHIPS

FARRELL APPLIES TO TRANSFER SUBSIDY AGREEMENTS TO FLI SHIPS    Farrell Lines Inc. has applied to the U.S. maritime Administration to transfer Maritime Security Program agreements covering three U.S.-flag subsidized ships to FLI Ships, Inc. .
   FLI Ships is currently owned by Farrell, but it will move out of company’s ownership following Farrell’s recently-announced acquisition by the Anglo-Dutch P&O Nedlloyd group.
   The vessels currently covered by the operating subsidy contracts are presently owned by FLI Ships, and will continue to be covered by those contracts after transfer.
   FLI Ships will be spun off by sale of all its stock to FLI Ships Holdings, Inc. (Holdings), a U.S. citizen corporation within the meaning of section 2 of the Shipping Act, 1916, as amended. FLI will be independent of the P&O Nedlloyd/Farrell group.
   FLI will collect the subsidies and charter the MSP vessels to the P&O Nedlloyd/Farrell group.
   The time charters of two other MSP vessels owned by First American Bulk Carrier Corp. and chartered to Farrell, will be taken over by P&O Nedlloyd/Farrell.
   The proposed transfer of U.S.-flag vessels operated by Farrell resembles the arrangements adopted by Lykes and APL in recent years following their purchases by non-U.S. companies.