AHL Shipping to liquidate
Domestic tanker operator AHL Shipping will liquidate under Chapter 7 of the Bankruptcy Code, said the International Organization of Masters, Mates and Pilots.
'AHL President Richard Horner and his staff made heroic efforts to save the company,' said MM&P International President Timothy Brown in the union’s Wheelhouse Weekly newsletter 'AHL has been in business with MM&P for over 25 years. We are aggrieved at this turn of events, which has saddened everyone in the MM&P community.'
Brown said the union’s benefit plans own about half of AHL and represent all the employees, not just deck officers, on the ships, which each has a crew of about 24 at any one time. Each of the 96 billets on the ships provide work for at least two MM&P members in a given year. Brown said a major challenge for the union would be trying to find replacement jobs for all the MM&P seamen who work on the ships.
The company was created in 1985 when the MM&P benefit plans purchased the ships.
Horner could not be reached for comment.
A Department of Transportation spokesman issued a statement that said, “In January 2010, AHL defaulted on federally guaranteed loans used to purchase four tanker ships. As part of the federal guarantee, the Maritime Administration paid off AHL's loans to the Bank of New York Mellon Trust Co. N.A., as indentured trustee for the bond holders, on Feb. 24.”
Shipyard commentator and historian Tim Colton said the ships were originally built by Bethlehem Steel at Sparrows Point from 1957 to 1960 and converted by Avondale in 1996 and 1997 by combining new double-hull forebodies with the original afterbodies.
The DOT statement added, “AHL surrendered three of the vessels to MarAd on April 15, 2010, and they are being moved to MarAd's reserve fleet site in Beaumont, Texas. The fourth ship is under arrest in Jacksonville, Fla., pursuant to a complaint filed by Bunkers International Corp. The Department of Justice, acting on MarAd's behalf, is involved in the litigation of all four ships.”
MarAd gave AHL Shipping, then known as American Heavy Lift Shipping, a $129.3 million loan guarantee in 1995 to have the four ships converted at the Avondale Industries shipyard.
The MM&P attributed the company’s problems to another series of three tankers the company had under construction and “the collapse of the domestic tanker market.”
In 2007 AHL said it would build the three tankers in connection with a charter agreement with Shell Trading Co. but that program fell apart last December.
In 2007 when the plan to build three new tankers was announced, Horner called it a “milestone for AHL, Shell and the U.S. shipping industry.” Shell’s “commitment to this endeavor through a long-term time charter agreement has helped to make this important project a reality.”
The ships were to be shallow draft so they could call at a wider range of ports and were to have twin-screw, diesel electric propulsion engine systems.
The companies also said they would use a “virtual shipyard concept” where hull construction and final assembly of the vessels was to be conducted at Mobile-based Atlantic Marine Alabama, but several other shipyards and specialty companies would participate in the construction including Aker Yards Marine Inc., Louisiana Machinery LLC, R&R Marine Shipbuilding Inc., and Ship Construction Strategies Inc.
The ships were never completed. Brown said the three ships were 90 percent, 40 percent and 30 percent completed when three limited liability companies that owned the tankers under construction filed for protection under Chapter 11 of the Bankruptcy Act.
Horner said in a press release the filings “were a direct result of claimed cost overruns.”
But in a court filing, Atlantic said, “Given the complexity of the vessels construction/assembly and in order to complete the vessels on time/budget, AHL and the defendants were required to perform various tasks by dates certain” but “failed to meet their obligations in a timely manner.” This caused it to “expend thousands of additional man hours to construct the vessels and to incur tens of millions of dollars in unreimbursed expenses.”
These failures breached the contracts and provided it grounds to terminate the contracts.
Colton wrote on his blog Maritime Memos Wednesday that despite the problems, “let’s be clear: there’s no reason why the ‘virtual shipyard’ approach shouldn’t work — it was the way that the AHL team tried it that didn’t work. Perhaps if they had gone for four standard ships from either Aker Philly or NASSCO, AHL would still be in business.”
Atlantic Marine Holding Co. owns facilities in Mobile and Jacksonville and at Naval Station Mayport near Jacksonville. It is owned by J.F. Lehman, the investment bank affiliated with the former Secretary of the Navy. ' Chris Dupin