R.G. Edmonson | Jun 02, 2009 4:48PM EDT
The Maritime Administration may be stuck with paying off a $136.8 million loan if it cannot dispose of two passenger-truck catamaran ferries that were operated in inter-island service by Hawaii Superferry.
Hawaii Superferry filed for Chapter 11 bankruptcy protection on Monday after the Hawaii Supreme Court effectively shut down the operation until it could complete an environmental assessment. The state department of transportation exempted the carrier, but environmental groups sued, alleging the ferry consumed more fuel than aircraft between islands, it contributed to traffic congestion, and endangered sea creatures.
In 2006, Marad guaranteed loans under the Title XI loan guarantee program for Austal Marine of Mobile, Ala., to build two vessels for Hawaii Superferry. According to news reports, the first, the Alakai was returned to Alabama Shipyard in Mobile in March after the company suspended service.
The carrier canceled its order for a second ship last October. The vessel was completed, but transferred to Alabama Shipyard, according to several news reports.
In April, Secretary of Defense Robert Gates announced that the department would charter the two ferries. Marad spokeswoman Susan Clark said that the agency could foreclose on the ships after its bond holders are paid. She added that it was too early to determine what other options Marad might have.
The Austal catamaran design is also being purchased by the military for high-speed troop movements, and has been considered for commercial short sea shipping operations.
In 2001, Marad took a $185 million hit on two cruise ships that were left without an owner after the bankruptcy of American Classic Voyages. The loss angered members of Congress, particularly Sen. John McCain, D-Ariz. The partially-completed vessels were later completed in Germany and sold to Norwegian Cruise Lines for service in Hawaii.
The loss to the Title XI loan fund prompted an investigation by the Deparment of Transportation’s inspector general. Marad was ordered to tighten its Title XI underwriting standards. Commercial interests say that the rules are so tight that Title XI is no longer an aid to raising capital for vessel construction.
Contact R.G. Edmonson at bedmonson@joc.com.
