Feds back
cruise ships

American Classic Voyages gets
a $1.1 billion financing guarantee
to construct 2 isle vessels

Star-Bulletin staff

American Classic Voyages Co. said today a federal agency has committed to guarantee up to $1.1 billion in financing for the two 1,900-passenger cruise ships that the company will build for its cruises around the Hawaiian islands.

Chicago-based American Classic signed a contract in early March with a Mississippi shipbuilder to build the ships, the first large passenger vessels to be built in the United States in more than 40 years and the biggest ever built in this country.

Now that the Maritime Administration of the U.S. Department of Transportation has given its guarantee, American Classic said it can go ahead and arrange the loans from commercial sources.

The federal commitment, made under a chapter of the Merchant Marine Act of 1936, will back up the loans for 87.5 percent of the cost of building the ships.

The Ingalls Shipbuilding yard at Pascagoula, Miss., is expected to deliver the first ship to the American Hawaii Cruises subsidiary of American Classic in early 2003 and the second in early 2004.

The company also has an option with Ingalls, a unit of Woodland Hills, Calif.-based Litton Industries Inc., to build a third ship.

The ships are the centerpiece of American Classic's Project America program, which includes putting a foreign-flag ship into the Hawaii trade while the others are being built.

Legislation introduced by Sen. Daniel K. Inouye (D, Hawaii) and passed in 1997 made the program possible through exemptions to laws against foreign vessels.