Aker Philadelphia Shipyard ASA ("AKPS" or the "Company") today announced that it has entered into settlement agreements with Overseas Shipholding Group, Inc., OSG America, LP (collectively, "OSG"), American Shipping Company ("AMSC') and Aker ASA and Aker Capital Fund (collectively "Aker") that settle all of the outstanding commercial disputes between the companies. The settlement agreements have received all necessary third party approvals as well as approval from the U.S. Coast Guard. The settlement agreements provide for the dismissal with prejudice of all claims in the arbitration with OSG.
The agreements provide for the resolution of certain issues facing AKPS including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program for AMSC announced in 2005. As part of the agreements, AKPS will sell the two shuttle tankers in this twelve ship build program (AKPS Hulls 015 and 016) directly to OSG companies to resolve AMSC's previously disclosed challenges to finance these vessels. With the settlement agreements the Company will resume drawing on its construction period financing facility.
Also as part of the agreements, exclusivity between AKPS and OSG and AMSC for tanker construction has been eliminated allowing the Company to pursue opportunities with any interested parties. AKPS and AMSC have agreed to cancel AMSC's options for tankers beyond AKPS Hull 20.
As part of the settlement agreements, total revenues on the existing shipbuilding contracts with AMSC will be reduced by $9.7 million. Because revenues under the contract are based upon the contract progress to date, revenues and operating profit will be reduced in the fourth quarter by approximately $7.4 million. After the earnings adjustment the Company is still on plan to maintain its previously provided earnings guidance regarding the tanker project.
The agreements provide for the resolution of certain issues facing AKPS including its ability to maintain adequate near term liquidity during the ongoing twelve tanker build program for AMSC announced in 2005. As part of the agreements, AKPS will sell the two shuttle tankers in this twelve ship build program (AKPS Hulls 015 and 016) directly to OSG companies to resolve AMSC's previously disclosed challenges to finance these vessels. With the settlement agreements the Company will resume drawing on its construction period financing facility.
Also as part of the agreements, exclusivity between AKPS and OSG and AMSC for tanker construction has been eliminated allowing the Company to pursue opportunities with any interested parties. AKPS and AMSC have agreed to cancel AMSC's options for tankers beyond AKPS Hull 20.
As part of the settlement agreements, total revenues on the existing shipbuilding contracts with AMSC will be reduced by $9.7 million. Because revenues under the contract are based upon the contract progress to date, revenues and operating profit will be reduced in the fourth quarter by approximately $7.4 million. After the earnings adjustment the Company is still on plan to maintain its previously provided earnings guidance regarding the tanker project.