MARAD 04-01
Thursday, October 25, 2001
Contact: John Swank
Tel: 202-366-5807
Maritime Administration Statement on Suspension of Work at Ingalls Shipyard
The U.S. Maritime Administration regrets that Northrop Grumman Corporation has suspended work on two passenger cruise ships being built for Project America, Inc., at the Ingalls shipyard in Pascagoula, Mississippi. Project America is a subsidiary of American Classic Voyages, Inc., which filed for bankruptcy protection on October 19, 2001.
The Maritime Administration already has $182 million in government guaranteed debt on five existing American Classic Voyages vessels, and $185 million so far on the first of two ships currently under construction at the Ingalls Shipyard. Approximately 37 percent of the first vessel has been completed. The Maritime Administration believes that it has no legal obligation under any existing agreement to guarantee additional Title XI debt for Project America, and it will not do so without a restructuring of financial arrangements that will provide greater protection for taxpayers in light of the recent bankruptcy. The Maritime Administration particularly regrets the loss of employment for the workers at the Ingalls shipyard, and has previously made a proposal to Northrop Grumman that would have allowed continued Title XI funding. The Northrop Grumman Corporation has rejected this proposal.
The Title XI program is more formally known as the Federal Ship Financing Guarantee Program; under its provisions the Maritime Administration provides debt guarantees to build ships in American shipyards.
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