NASSCO, U.S. Shipping Partners Finalize Contract

General Dynamics NASSCO has finalized a $1b contract with U.S. Shipping Partners L.P. (USS) to build nine product carrier tankers. The contract includes options for five additional ships. Construction of the first tanker is scheduled to begin in the third quarter of 2007, with delivery to occur by the second quarter of 2009. The product carrier tankers or “PCs” will be 183 m in length and 32.2 m in beam, with a design draft of 11.8 m. The ships are to be double hulled, weighing 49,000 dead weight tons (DWT) and will have a cargo capacity of 331,000 barrels. USS operates a fleet of 10 deep sea vessels that carry refined petroleum and chemical products among customer facilities along the U.S. coast and has 5 double-hulled, articulated tug barges on order or under construction. Financing for the transaction is being provided by a joint venture among affiliates of the Blackstone Group; USS Product Carriers, a wholly owned subsidiary of USS; and other investors. Investment banking services were provided by Lehman Brothers and CIBC World Markets, with Sterling Investment Partners, a controlling partner of USS, providing advisory services negotiating and structuring the transaction. The PCs are the second class of tankers NASSCO has been contracted to produce since 2000. NASSCO is scheduled to deliver its final double-hulled tanker to BP Shipping Company of Alaska on August 18, under a four-ship contract. By comparison, the BP tankers are 185,000 DWT, 287 meters (941 feet) in length, and have a capacity of about 1.3 million barrels.