Blackstone Secures Title XI Decision
Private equity group Blackstone has succeeded in getting the U.S. Maritime Administration to commit to announcing a decision in the $340M Title XI loan guarantee application by its subsidiary American Petroleum Tankers by August 31.
The lawsuit brought a week ago by APT against the U.S. and its Maritime Administrator David Matsuda has been withdrawn as a result.
However, U.S. District Judge Karen Kollar-Kotelly in Washington, D.C. has ordered the parties to file a joint status report within 10 business days of MarAd’s decision, proposing a schedule for proceeding in the matter.
A joint stipulation lodged by APT lawyers Alex Blanton and Joseph Click of Blank Rome and government representatives Stuart Delery, Sandra Schraibman and Karen Seifert commits MarAd to issuing APT a written decision approving or denying its application “on or before August 31."
APT’s lawsuit contended that a statutory limit of 24 months on processing Title XI applications could torpedo its own application, which was filed in 2010.
APT said its application would expire on August 31, and it did not want other Title XI applicants who filed later to walk away with scarce cash without its own case getting a fair hearing.
“Defendants make this stipulation in the interest of efficiency for the court and the parties, and without conceding whether the defendants are legally required to act by August 31; whether this court has jurisdiction over this case or plaintiff’s motions; whether the motions are properly lodged; or whether plaintiff is entitled to any relief on these motions,” states the joint stipulation.
APT’s lawsuit was brought on the premise that its application had been deliberately sidelined because of the Obama administration’s bias against private equity.
MarAd’s Title XI federal ship financing programme is designed as “a full-faith credit guarantee by the U.S. government to promote the growth and modernization of the U.S. merchant marine and U.S. shipyards."
APT’s original application was for $470M, to cover five Jones Act product tankers of 49,000 dwt each that are already paid for. The ships were delivered from Nassco in San Diego between 2006-2010 at a total cost of some $780M.
APT reduced the amount requested to $400M last year and to $340M this May, and the guarantee period from 25 years to 20 years.
APT chief executive Rob Kurz said last week that his company’s application covers premium assets in an industry that has a stable business base, which makes it the “safest and most attractive Title XI application in the history of MarAd."
APT was not interested in the money per se but in a decision, Mr Kurz added.
APT’s lawsuit highlighted two additional facts that the company said underscored the business merits of its application. Two of the tankers were built with “specially designed national defence features approved by the U.S. Navy and are on charter to the Navy’s Military Sealift Command," APT said.
Second, its application for $340M at 20 years “covers only 51.2% of the cost of its tankers, well below the average 83% and 22.7 years, respectively, of applications approved during the past decade."
"Blackstone Secures Title XI Decision," by Rajesh Joshi first appeared in Lloyd's List on July 25, 2012. www.lloydslist.com.