Trinity Industries to Construct Tank Barges for Kirby
Kirby Corporation has signed a contract with Trinity Industries, Inc. for the construction of 16 double-hull, 30,000 barrel capacity, inland black oil tank barges. Kirby plans to take delivery of seven of the tank barges in 2003 and nine in the first half of 2004. The total purchase price of the 16 barges is approximately $29 million, with an estimated $12.6 million to be expended in 2003 and $16.4 million in 2004. Under the terms of the contract, Kirby has an option for the construction of 16 additional 30,000 barrel capacity black oil tank barges.
In October 2002, Kirby entered into a barge management agreement with Coastal Towing, Inc. ("Coastal") to manage 54 black oil tank barges owned by Coastal, along with the 66 barges Kirby operates in its black oil fleet. Over the next three years, a number of barges in the combined Kirby/Coastal black oil fleet will be retired and replaced with new tank barges. Under the management agreement, Coastal has the right to maintain their same capacity share of the combined fleet by building replacement barges as older barges are retired.
Joe Pyne, Kirby's President and Chief Executive Officer, commented, "Kirby is currently in discussions with Coastal to determine whether Coastal intends to exercise its right to replace the Coastal capacity to be retired. Under the barge management agreement, Coastal has the right to purchase a portion of the 16 tank barges. If Coastal chooses not to exercise its right to purchase its share, Kirby will purchase the tank barges that Coastal chooses not to purchase. The black oil market is a market in which Kirby has a strong position and one that should perform well in the future. Given current market conditions, it is our intention to build barges that will maintain our current market share in this important market."
Financing of the construction of the tank barges to be owned by Kirby will be through operating cash flows and available credit under Kirby's revolving credit facility.