Anil Raj, president and COO of Halter Marine, in many ways embodies the company for which he has worked for the last 15 years. Joining as the Director, Engineering, Production Controls and Procurement in 1987, Raj has relied on a solid technical foundation, first to help establish and continue the company's reputation as one of the world's most prolific builders of ships and boats, and second to help the company hang on - to customers as well as key technical and production staff, as the company navigated the tumultuous environs following its Chapter 11 filing of April 2001. Despite well-chronicled skepticism, Halter today sits on the verge of a remarkable rebound that could again make it a ubiquitous presence in both commercial and military marine construction.
"Every adversity has a blessing, "Raj said. While he readily admits that the period of Chapter 11 "has not been kind to the company," he revels in the fact that Halter Marine has, since its Chapter 11 filing delivered more that $250 million worth of vessels and won contracts, which including options are worth more than $275 million. While this level is a far cry from the amount of business conducted pre-Chapter 11 filing, he believes it a strong indicator of the company's willingness and ability to continue despite the financial problems, problems brought on primarily by drain on cash liquidity due to two bad contracts not associated to Halter, the vessel business unit of Friede Goldman Halter.
"At the time of the filing, the company had barely enough cash to meet two week's payroll and no credit line," Raj said. "The dedicated employees rallied around the need to find a solution. For some time prior to the filing the company's liquidity problem made it difficult to get materials to contracts. This caused the progress on the contracts to slow down. The resultant lack of progress and collection of milestone payments from customers further aggravated the liquidity problem. Immediately after filing, with no line of credit, we had to figure out how to "prime" this cash pump. We made some strategic decisions on how to do this combined with customer and supplier support, helped to put the company in a position where it actually started to accumulate cash."
While the last couple of years have been little reason to celebrate for Halter, the fact that Raj and staff are still in Halter's Gulfport, Miss., offices, which is a veritable museum of vessels built over the last four decades, a testament to the nearly 3,000 built by the company since started by Harold Halter in 1951 , is accomplishment in itself. At the time of Marine News’ visit, the company was close to the close of the deal, which would make Vision Technologies Kinetics, Inc. (VTK), a wholly-owned subsidiary of ST Engineering, the new owner of Halter Marine. VTK's $66 million winning bid gives it Halter Pascagoula, Halter Moss Point, Moss Point Marine
, Halter Port Bienville, Halter Lockport and Halter Gulfport East, including the Corporate HQ and Gulfport Central. VTK is actually a unit within VT Systems. It is a unit that has DoD approval to conduct military work for the U.S. Considering Halter's federal contracts, it was decided to structure the acquisition in this manner.
"When you have a foreign company, which owns a U.S. company doing military work, there is a well-defined structure to put up a firewall and maintain security," Raj said. VT Kinetics has a U.S. DoD approved Special Security Agreement and necessary clearances to do classified work. Raj points out that the sale was also approved by the Presidential Committee for Foreign Investment in the U.S. VT Systems, spear headed by a retired U.S. Army four-star General, John Coburn, it also has aerospace operations in Mobile, Alabama, San Antonio, and Dallas, Texas.
ST Engineering is a diversified company with extensions in marine, land, aerospace and electronics. The Halter Marine acquisition is, in essence, the company's marine business in the U.S. While final plans regarding strategies for the former Halter Marine (to now be known as VT Halter) are yet set, Raj stated that it will be treated as an autonomous business unit from the Singapore unit. VT Halter intends to keep substantially all Halter personnel at the time of closing. This includes the management, technical personnel and production workers of Halter Marine.
Ready for Return
Bankruptcy humbles, to put it simply, and while the company retains a solid technical core and a reference list of more that 2,700 vessels, job one will be to re-instill the confidence and swagger that helped lead Halter to the mount many years ago. Raj said that a number of owners withheld orders during the past year and a half due to the bankruptcy proceedings and the uncertain future of the company. He said that a good number of customers stayed the course, signing letters of intent, which turn into contracts once the bankruptcy matter was resolved. In addition, news of the pending deal with VTK he notes that "we have received more inquiry calls in the last week than we had in the previous three months combined." In total, he estimates that the company has approximately $2 billion worth of proposals currently being evaluated by customers.
Two customers instrumental in ensuring that there is continued work at the Halter yards to allow a steady, if not spectacular, stream of work to ensure that its key technical and production staff stayed adequately busy; the U.S. Army and NOAA, which awarded the company the contract to build one Logistic Support Vessel with an option for two additional units and up to four Fisheries Reserve Vessels. These two contracts, when options are exercised, are worth approximately $240 million.
While plans regarding the use of Halter facilities will evolve in the coming months, it is a good bet that the company will rely on diversity of product - both commercial and military - to regain its footing. On the defense side, it will be imperative for Halter to project a very "American" image, keeping an arm's length between it and its Singapore connection. Conversely, on the commercial side, the company will rely on the combined strengths inherent in having two strong units literally a world apart. "ST Engineering has a similar product line, but on the higher end and above," Raj said. Both companies have strong international presence, but ST Engineering also has the capabilities to serve the containership and frigate markets, for example.
Doubters will surely persist, as the company seeks to retains its status as a leading builder in the GOM and beyond, but Raj is confident that the pieces are in place. "We are now well-capitalized, and we have been able to retain a most of our technical staff, helping to maintain the franchise value." In addition, the thousands of Halter-designed and -built vessels in operation provided the new owner an invaluable technical database it felt it could not pass.
"We don't sell a boat or a ship to our customer… we sell a solution" Raj said. "We have seldom won a contract on low price; rather we have won contracts on our quality and custom solutions. These are aimed at providing superior value to our customers so they can be more competitive."