Both companies say thatBy Russ Lynch
most of the 350 employees
will be retained
Hawaiian Electric Industries Inc. has agreed to sell its Young Brothers Ltd. interisland barge business and most of the assets of its Hawaiian Tug & Barge Corp. subsidiary to Saltchuk Resources Inc., a privately held company based in Seattle.
HEI, which said it will take an after-tax loss of about $2 million in the deal, declined to disclose the price.
Saltchuk is a holding company operating ocean freight and tug and barge businesses on the West Coast, Alaska and in the Gulf of Mexico. Young Brothers operates a scheduled interisland freight business regulated by the Public Utilities Commission. The companies said PUC approval will be needed for the transaction to be completed.
Hawaiian Tug & Barge provides charter towing services and other harbor operations.
The companies, announcing the agreement late yesterday, said most of the 350 employees of the two HEI subsidiaries will be retained, including Glenn Hong, president of both. However, between 10 and 12 Hawaiian Tug & Barge positions may be eliminated, they said.
The companies said they will work with the Inland Boatmen's Union to determine which jobs will be lost.
The Hawaii companies will keep their names and continue to operate as they have been, with a boost where needed from Saltchuk, which described itself as strongly capitalized and consistently profitable.
The ocean operations are a small part of HEI's business and their operating results are not disclosed separately in HEI's financial reports.
Instead, they are reported in the "other" business category, combined with the results of other small subsidiaries.
Hong said Saltchuk has "tremendous market strength in the domestic maritime transportation industry."
"Saltchuk understands our business extremely well and has a proven record of success," Hong said.
Mike Garvey, one of the owners of Saltchuk, said Young Brothers and Hawaiian Tug & Barge are a perfect fit with his company and gaining a strong presence in Hawaii will allow Saltchuk to expand into the Pacific Basin.
Robert F. Clarke, chairman, president and chief executive officer of HEI, said the company has invested more than $60 million in new equipment in the maritime businesses since acquiring them in 1986.
He described Saltchuk as a "very responsible company with a good reputation" and said it makes sense for Young Brothers and Hawaiian Tug & Barge to be owned by a company that specializes in maritime freight transportation.
Saltchuk is a holding company with a number of subsidiaries, including Totem Ocean Trailer Express Inc., which operates a freight service in Washington and Alaska, and Foss Maritime Co., a tug and barge business in the Pacific Northwest.
Foss at one time was owned by Hawaii-based Dillingham Corp., which also owned Young Brothers and Hawaiian Tug & Barge.
Young Brothers was first incorporated in 1913 to haul freight between Oahu and Molokai. Together, Young Brothers and Hawaiian Tug & Barge operate 11 tugs and nine barges.
HEI's main businesses are the generation of electricity in the islands and the American Savings Bank subsidiary.
HEI also has a business that develops independent power and energy services plants in Asia and the Pacific.
In addition to PUC approval, the transaction is conditional on a Saltchuk's examination of the finances and operations of the HEI subsidiaries, the companies said.