Tuesday, January 13, 2004

Ferry venture accelerates

Hawaii Superferry has secured
a pact to buy two ships, as well as
investment advice and commitments

The vision of an interisland ferry system has taken another step forward, with a shipbuilder signing a conditional agreement to supply two 340-foot catamaran vessels to Hawaii Superferry, contingent on a series of financing arrangements.

Hawaii Superferry said yesterday that Austal USA has agreed to build the two high-speed ships, which would hold 900 passengers and as many as 280 vehicles, for delivery between 2006 and 2008. The vessels would be able to travel up to 45 miles per hour, reaching Maui and Kauai from Honolulu in three hours and the Big Island from Honolulu in four hours.

Each vessel costs about $75 million, and Austal has agreed to invest more than $10 million in the venture, said John Garibaldi, a partner in Hawaii Superferry and former chief financial officer of Hawaiian Airlines.

Hawaii Superferry has estimated that a family of five traveling by car to the neighbor islands from Oahu could use the ferry service for about half the cost of flying and renting a car, Garibaldi said.

A start-up company, Hawaii Superferry seeks to raise around $3 million in venture capital by the end of March, with help from isle investor John Dean, former chairman of the holding company of California's Silicon Valley Bank. The company has been talking with investors in Hawaii and on the mainland, Garibaldi said. Tim Dick, founder and chairman of Hawaii Superferry, previously founded Grassroots Enterprise Inc., an Internet political and advocacy software business in San Francisco, raising $35 million.

Hawaii Superferry also will seek debt financing of roughly $130 million, and needs a Title XI federal loan guarantee for part of the amount from the Maritime Administration, Garibaldi said.

Garibaldi hailed the agreement with Austal as a major milestone in the two-year-old project. "It is significant in that they are participating in our financing, they are making an investment in us, and they're assisting us through entering this agreement," Garibaldi said.

"Our belief in Hawaii as an ideal fast ferry market is backed up by Austal USA's commitment to provide financial support, including an investment in Hawaii Superferry," said Chris Pemberton, Austal USA's vice president of sales and marketing.

Austal USA is an Alabama-based joint venture of Australian boat builder Austal Ltd. and U.S. shipbuilder Bender Shipbuilding & Repair Co. The company's proposal was the best of three, and the agreement was signed during the holidays, Garibaldi said.

Agreement in hand, Hawaii Superferry can approach investors with a definitive timetable, Garibaldi said. A good part of this year will also be taken up with the necessary studies for a Title XI loan guarantee, he said. Last year, Matson Navigation Co. received $75 million commitments for its two new Hawaii-West Coast container ships.

Hawaii Superferry envisions running at least three vessels in the Hawaii interisland trade, but is starting with two to test the waters, Garibaldi said. The two ships would require about 300 employees.

Gov. Linda Lingle and Sen. Dan Inouye hailed the project as a social and economic benefit to the islands. The state completed a new $4.3 million interisland ferry terminal at Pier 19 in Honolulu Harbor in 2002.

Past ferry prospects in Hawaii have come and gone. A steamship Hualalai set off in January 1966 and went out of business before the year's end. In 1975, Seaflite launched a hydrofoil system connecting Honolulu, Maui, Kauai and the Big Island, but its parent company went broke three years later and the Hawaii operation ended.


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