AHL lays off mariners after relinquishing all four of its ships

A loan default by Texas-based AHL Shipping Co. has pushed the company to the brink of bankruptcy, with the U.S. Maritime Administration (MarAd) taking custody of three of AHL’s tankers, while its fourth ship was sold at auction.

AHL, previously known as American Heavy Lift Shipping, defaulted on federally guaranteed loans in December, according to the U.S. Department of Transportation. The loans, granted in 1995, were used to purchase and convert four ships — built between 1957 and 1960 — to double-hulled tankers compliant with the Oil Pollution Act of 1990 (OPA 90).

AHL President Richard Horner attributed the loan default to the decline of the domestic tanker market and the demise of a program to build three new ships. He said in mid-May that the company had not filed for Chapter 7 bankruptcy, despite industry reports to the contrary. Under a Chapter 7 filing, a company’s assets are liquidated to pay creditors.

“I’m thinking about it, but that’s about all I’ve got to say about that,†he said. “I just have no idea. I have about 400 employees and I have been going through the process of putting them out on the street, so that’s what I’ve been trying to do. Just take care of the business at hand.â€

Horner said the severity of the recession increased the difficulties for his company and the domestic tanker industry in the face of global competition.

“The tanker market just absolutely went in the complete doldrums,†he said. “I haven’t seen it like that in a number of years. I think the best way I can characterize it is: When it gets cheaper to buy product in India and ship it on foreign-flagged ships to Florida than it does to buy it in Lake Charles (La.) and take it to Florida, then you’ve got a problem.â€

Adding to the company’s downturn was the demise of a program to build three shallow-draft tankers for domestic trade. The ships — each with a capacity of 330,000 barrels and designed to comply with the Jones Act and OPA 90 — were to be built in connection with a charter agreement with Shell Trading Co.

Horner said several manufacturers were involved in the program using a “virtual shipyard†approach. Hull construction and final assembly were designated for Atlantic Marine Alabama in Mobile, with other shipyards and companies under contract with AHL — including Aker Yards Marine Inc., Louisiana Machinery LLC, R&R Marine Shipbuilding Inc. and Ship Construction Strategies Inc. — contributing components and expertise.

The ships were at various stages of completion at Atlantic Marine when the three limited liability companies that owned the vessels filed for Chapter 11 bankruptcy protection in December, saying cost overruns at Atlantic had caused them to run out of money. (Under Chapter 11, a company asks for court protections from creditors while it tries to reorganize.) Atlantic said in a court filing that AHL failed to meet deadlines for providing designs and components, resulting in higher-than-expected costs.

MarAd, which provided a loan guarantee to AHL in 1995, took custody of three of the company’s four tankers in April. Cheron Victoria Wicker, public affairs director for MarAd, said two of the vessels —The Monseigneur and New River — are at a shipyard in Port Arthur, Texas, being prepared for storage in the Beaumont Reserve Fleet. A third ship, Captain H.A. Downing, is undergoing similar preparations at a shipyard in New Orleans.

“The current plan is to tow all three vessels to the Reserve Fleet in June,†Wicker said.

AHL’s fourth tanker, Anasazi, was sold at a court-ordered auction on May 6 in Jacksonville, Fla., to satisfy the claims of one of the ship’s suppliers, Bunkers International Corp. The vessel was purchased by Keystone Shipping, Wicker said.

Timothy Brown, international president of the International Organization of Masters, Mates & Pilots (MM&P), said the demise of AHL “has saddened everyone in the MM&P community.†In addition to job losses resulting from the seizure of AHL’s tankers, the union’s members have an ownership stake in the company.

“If you take a look at the workers and their reliefs, we’re probably talking about (the loss of) 168 jobs,†Brown said. “That would include engineers, mates and unlicensed personnel. They’re covered under an ESOP (employee stock ownership plan), but with them going into bankruptcy, we don’t think that’s worth very much.â€

Brown said that while the failed Shell Trading program “certainly didn’t help†AHL’s bottom line, the company’s problems reflect wider problems in the domestic tanker industry.

“The market for ships carrying product sucks,†he said.

By Professional Mariner Staff