York, N. Y., to Messrs. Despard & Co., Inc., of New York, N. Y., regarding the vessels authorized in Public Law 575, which contains the following paragraph: "In summation it is our opinion that, based on the types of tankers being built for ordinary commercial service, there are features of the required general characteristics of these charter tankers which indicate that they are of a special type designed for special purposes." A competent supervising architect will be selected in consultation with the American Bureau of Shipping, and full details regarding his experience and qualifications will be supplied as soon as possible. 3. The vessels under reference will be constructed pursuant to the authorization in Public Law 575, 83d Congress, 2d session, in conformity with the specifications of the Military Sea Transportation Service issued thereunder. It is proposed that the vessels will be chartered to MSTS under a long-term time charter, substantially in the same form as that attached to the above-described invitation to bid. It is believed that these facts render inapplicable that portion of item V-C (3) referring to the estimated operating expenses and revenues of the new vessels; and a comparison with similar figures for a typical vessel for the fleet now serving the trade route for which the new vessels are intended. (d) No contract has yet been awarded for the work described in the preceding item. It is expected that such contract will be entered into with one of the yards of the shipbuilding division of the Bethlehem Steel Co. Bids for the construction of the vessels have been obtained from the Bethlehem Steel Co., the Ingalls Shipbuilding Corp., and the Newport News Shipbuilding Co. While all these bids were satisfactory, it is considered that the most advantageous was that submitted by Bethlehem Shipbuilding Co., based on design, construction characteristics, and price. No amounts have yet been paid by or for the account of the applicant. No obligation for future payments has yet been undertaken. Upon approval of this application and the signing of an agreement with MSTS pursuant to the invitation to bid described above, applicant proposes to enter into an agreement with the shipyard calling for the customary progress payments. (e) Not applicable. (f) Not applicable. VI. Fees and charges There are no sums paid or to be paid by the applicant in connection with the proposed loan, mortgage, insurance, and commitment to insurance, except as follows: A commitment fee will be payable to the insurance company at a rate which is under negotiation at the present time but which probably will be within the range of one-fourth to three-fourths of 1 percent of the insurance company's share of the insured amount. Eastman, Dillon & Co., investment bankers, of 15 Broad Street, New York, N. Y., will be paid a fee for financial advisory service of one-half of 1 percent of the insured amount of the mortgage loan and 1 percent of the uninsured amount thereof; and, in addition, Eastman, Dillon & Co., or the partners thereof, will receive 10 percent of applicant's capital stock. Such fee, however, is payable only on the condition that the aforesaid loans are closed. This fee will be paid for the following services with respect to the project: complete investigation through banks and rating agencies of principals involved in companies; examination of the enabling legislation and all documents in connection with organization of companies; preparation of memoranda relative to proposed financing, including cash flow projections; consultations with banks and insurance-company lenders through personal interview necessitating large expenditure of time, travel and out-of-pocket expenses in connection therewith; daily, and at times, hourly meetings with principals; preparation of complete brochure on financing, insurance, operating details, and legal requirements; complete and continuous financial consultative services available to tanker operators after successful conclusion of this project. VII. As to schedules and exhibits The documents filed with this application include the following: Schedule I.-Please see the enclosed letter of Eastman, Dillon & Co. and the attachments thereto. Exhibit A.-A copy of (1) applicant's articles of incorporation and (2) of applicant's bylaws. There are no other governing papers. Exhibit B.-Balance sheet and profit and loss statement of the applicant as of November 29, 1954. ཝཱི། Dated New York, N. Y., March 15, 1955. [SEAL] Attest: OLEUM TRANSport Corp., A. L. LEWIS, Secretary. I, J. Whitney Lewis, do certify that I am the president of Oleum Transport Corp., the applicant on whose behalf I have executed the foregoing application; that the applicant is a citizen of the United States within the meaning of section 2, Shipping Act, 1916, as amended (U. S. C., title 46, sec. 802), sections 37 and 38, Merchant Marine Act, 1920, as amended (U. S. C., title 46, secs. 888, 889), and section 905 (c), Merchant Marine Act, 1936, as amended (U. S. C., title 46, sec. 1244); that this application is made for the purpose of inducing the Maritime Administrator to grant insurance pursuant to the provisions of title XI of the Merchant Marine Act, 1936, as amended, and regulations prescribed thereunder; that I have carefully examined the application and all documents submitted in connection therewith and, to the best of my knowledge, information, and belief, the statements and representations contained in said application and related documents are full, complete, accurate, and true. J. WHITNEY LEWIS. Subscribed and sworn to before me this 15th day of March 1955. Commission expires March 30, 1955. FRANK E. NATTIER, Jr., EASTMAN, DILLON & Co., New York, N. Y., March 14, 1955. Re Oleum Transport Corp., application for ship mortgage and loan insurance under Title XI, Merchant Marine Act, 1936, as amended. GENTLEMEN: This letter is to accompany the application of Oleum Transport Corp. for ship mortgage and loan insurance, and its purpose is to inform you concerning Oleum's plan for financing the construction of three 25,500 deadweight tons tankers to be constructed and chartered to MSTS pursuant to the provisions of Public Law No. 575. It is not possible at the present time to furnish you with all the information called for in schedule I attached to your application form. The plan for financing the three subject tankers is set forth in the form of commitment letter from an insurance company lender to Oleum attached hereto. The writer has been informed by Mr. Peter B. Langmuir, manager industrial investments, the Northwestern Mutual Life Insurance Co., that said company's finance committee of the board of trustees approved the financing of three tankers at its meeting on March 11. Within the very near future we expect to receive from Northwestern Mutual a commitment letter substantially in the form of the draft attached hereto. When such letter has been received, we will furnish you copies. If, in the meantime, you wish to check with this company, you may get in touch direct with Mr. Langmuir who has authorized the use of his name. Also attached hereto is a copy of a letter from the National City Bank of New York dated January 17, 1955, which states the bank's willingness to participate in the financing of these tankers. We are also bankers for the Atlantic Lines Co., Inc., and Equitable International Corp., each of which companies has submitted a bid to MSTS covering three tankers. We have been informed by Mr. William L. Phillips, vice president, the Mutual Benefit Life Insurance Co., 300 Broadway, Newark, N. J., that his company's committee has approved the financing of one tanker, and we expect to receive a commitment letter substantially in the form of the draft attached hereto from this company within a few days. We are actively negotiating for similar commitments covering the remaining 5 ships of the 9 which we are planning to finance with Penn Mutual Life Insurance Co., Sixth and Walnut Streets, Philadelphia 5, Pa., Connecticut General Life Insurance Co., Hartford 15, Conn., Bankers Life Insurance Co., Des Moines, Iowa, State of Wisconsin Investment Board, State Capital Building, Madison, Wis., Continental Casualty Co., 310 North Michigan, Chicago, Ill., Central Life Insurance Co., 505 Fifth Avenue, Des Moines, Iowa, and other lending institutions. It takes a considerable amount of time to submit and explain this deal to lending institutions and for the latter to prepare reports for their investment committees and obtain such committee's approval; we are proceeding as rapidly as possible. We hope and expect to have definite commitments for all nine tankers within the near future and will keep you advised. Very truly yours, Mr. J. W. LEWIS, Wм. G MCKNIGHT, Jr. THE NATIONAL CITY BANK OF NEW YORK, President, Oleum Transport Corp., Empire State Building, New York 1, N. Y. DEAR MR. LEWIS: It is our understanding that you will have constructed in American shipyards three 25,000-deadweight ton tankers to be chartered for 10 years to the Navy pursuant to Public Law No. 575 of the 2d session of the 83d Congress. We further understand that the shipyard cost of the vessels will be about $7,750,000 per ship and that interim financing, legal fees, inspection and supervision of construction will bring the capitalizable cost up to around $8 million a ship. Of the $8 million cost, 871⁄2 percent or $7 million is to be financed for a 20-year period against a first preferred ship mortgage which will be insured 100 percent by the United States Government in accordance with Public Law 781 of the 2d session of the 83d Congress. We are pleased to inform you that in principle we are prepared to advance 871⁄2 percent of the aggregate cost of the 3 vessels up to a total of $21 million to cover construction progress payments, provided that prior to any such advance by us we are able to obtain an unconditional take out from a responsible long-term lender in form and substance satisfactory to us for 65 percent of the construction advances made by us, that upon the delivery of the ships we obtain as assignment of the 10-year Navy charter, assignment of insurance in such amounts and against such risks and with such underwriters as we may require, and that all the documentation supporting the advance and its refunding into a 20-year mortgage debt is approved by ourselves and our counsel. If we are successful in obtaining the long-term financing, which you request, we envisage that this would reduce our debt per vessel upon delivery by 65 percent leaving us with $2,450,000 per ship maturing in equal monthly installment s over a 7-year period commencing with the delivery of each ship. Our maximum loans after completion of construction of the vessels would, therefore, be $7,350,000. It is understood and agreed between us that the maximum debt secured by a mortgage on the vessels will not exceed 871⁄2 percent of their capitalizable cost and that you will make arrangements to supply the 121⁄2 percent equity money. Our willingness to finance these vessels in the manner outlined above is, of course, predicated upon your obtaining a rate in the aforementioned Navy charter, which will produce an estimated net throwoff, after all operating charges, and which will be sufficient in our judgment adequately to cover the debt maturities we plan to acquire. Advances made to cover the progress payment of the vessels would be made at an interest cost net to us of 34 percent per annum and the mortgage maturities would bear interest rate net to use of about 31⁄2 percent per annum. With kind regards. Sincerely yours, WALTER B. WRISTON, Vice President. EASTMAN, DILLON & Co., Re Oleum Transport Corp., application for ship mortgage and loan insurance under title XI, Merchant Marine Act, 1936, as amended MARITIME ADMINISTRATION, Department of Commerce, Washington, D. C. (Attention: Division for Government Aid.) GENTLEMEN: Please find attached hereto a copy of the commitment letter of the Mutual Benefit Life Insurance Co., 300 Broadway, Newark, N. J., dated March 16, 1955, signed by Mr. William L. Phillips, vice president, securities investment department, covering the financing of one tanker, which letter is referred to in our letter addressed to the Maritime Administration dated March 14, 1955, attached as schedule I to the application of Oleum Transport Corp., dated March 15, 1955, and delivered to you in Washington by Mr. J. Whitney Lewis, president, on March 16, 1955. As we have previously told you the Northwestern Mutual Life Insurance Co., 720 East Wisconsin Avenue, Milwaukee 2, Wis., has approved the financing of three tankers and as soon as we receive this company's commitment letter copies thereof will be forwarded to you. Please be advised that the finance committee of the Connecticut General Life Insurance Co., Hartford 15, Conn., has approved the financing of one tanker and we should receive this company's commitment letter very shortly. As additional insurance companies approve the financing of the 4 remaining tankers of the total of 9 which we have undertaken to finance for Oleum Transport Corp. and for the Atlantic Lines Co., Inc., and Equitable International Corp., we will inform you. Fifteen copies of this letter and attachment are being supplied herewith for attachment to the fifteen copies of the aforesaid application heretofore filed with you. Very truly yours, Wм. G. MCKNIGHT, JR. THE MUTUAL BENEFIT LIFE INSURANCE Co., Re proposed 25,500 deadweight tons tanker financing The ATLANTIC LINES CO., INC. In care of Eastman, Dillon & Co., New York, N. Y. DEAR SIRS: Your bankers, Messrs. Eastman, Dillon & Co., have discussed with us and furnished us with memoranda and documents concerning the financing of from one to nine 25,500 deadweight tons high speed tankers which you propose to build and charter to the Military Sea Transport Service of the Department of the Navy under the provisions of Public Law 575, 83d Congress, 2d session. We are advised that under the provisions of Public Law 781, 83d Congress, 2d session, 100 percent of a loan or mortgage covering 871⁄2 percent of the cost of a "special purpose vessel certified by the Secretary of Defense to be essential to the national defense" may be insured through the Federal ship mortgage insurance fund by the Secretary of Commerce acting through the Maritime Administration. We understand that each of your companies has submitted a bid to MSTS covering the construction and charter for a 10-year period of three such tankers; that MSTS does not propose to take action on your bids until you have shown a plan for financing the construction of the tankers; that such a plan would not be feasible or complete without assurance from the Maritime Administration that the aforesaid Government insurance would be forthcoming; and that both your bids and the time for action thereon by MSTS have been extended to April 1, 1955. You have represented to us that the cost of each tanker at the time of delivery is expected to be $8,240,000 as follows: Construction cost (firm contract price-uncoiled). Owner's equipment and spares. Interim financing costs.. Total___ $7,690, 000 100, 000 150, 000 300, 000 8, 240, 000 You have further represented that you have firm offers from Bethlehem Steel Co., Inc.-Shipbuilding Division, and from Newport News Shipbuilding & Dry Dock Co., now extended to April 1, 1955, pursuant to which each of these companies has agreed to build the subject tanker at a fixed price, not subject to escalation, of not more than $7,690,000 (uncoiled). We have seen a copy of a letter dated March 3, 1955, from Despard & Co., insurance brokers, to Eastman, Dillon & Co., setting forth the types of insurance coverage available for these tankers and the premium rates. We understand that the estimates of operating costs which you have shown us include the cost Subject: Application for title XI aid in construction of tankers for MSTS charter. THE ATLANTIC LINES Co., INC., c/o Robert D. Weisberg, New York, N. Y. GENTLEMEN: *** You are advised that further consideration will be given to your application provided the following conditions can be met: 1. The application shall not request more than 90 percent insurance coverage of 871⁄2 percent of the construction cost of each tanker to be chartered to the MSTS. The balance of 121⁄2 percent of the construction cost must be furnished in equity capital by the prospective owner. 2. The applicant must have a minimum net working capital of $475,000 per ship at the time of the beginning of the mortgage insurance agreement to cover necessary expenses to the applicant during the construction period and operating expenses prior to receipt of first charter hire. 3. The initial net worth of the applicant shall not be less than $1 million paid-in capital per ship, of which not less than $500,000 must be contributed by the holders of common stock. In addition, during the period the mortgage insurance is in force, the owners will be required to refrain from doing certain acts, as set forth in general order 60, if such acts would result in reducing net worth below 121⁄2 percent of the depreciated cost of the vessel or 121⁄2 percent of the mortgage indebtedness, whichever is greater, or reducing the common stock interest below the lower of $500,000 or the mortgage indebtedness. General order 60 specifies in part that the purchaser shall agree that (i) no capital shall be withdrawn, (ii) no share capital shall be converted into debt, (iii) no dividend shall be paid, (iv) no salary at a rate in excess of $25,000 per annum shall be paid, if, after such withdrawal, conversion, or payment, the amount of net worth thereby would be reduced below the minimum prescribed. 4. In the event more than one tanker is proposed, and the construction periods are so scheduled as to provide for one tanker to be in operation before delivery of the next, consideration will be given to modifying the above requirements on a multiple-ship basis, depending, however, on the particulars of the specific case. If you are able to meet the foregoing requirements your application will be given prompt and expeditious attention, it being understood, however, that upon further review of the subject application it may be necessary to request additional information with respect to other phases of the application. APPLICATION FOR SHIP MORTGAGE AND LOAN INSURANCE UNDER TITLE XI, MERCHANT MARINE ACT 1936, AS AMENDED SUMMARY INFORMATION Name of applicant: Oleum Transport Corp., Suite 7606, Empire State Building, 350 Fifth Avenue, New York 1, N. Y. Name of proposed mortgagee and lender: 1. Mortgagee: Negotiations are in progress with the Northwestern Mutual Life Insurance Co., 720 East Wisconsin Avenue, Milwaukee, Wis. 2. Lender: Negotiations are in progress with National City Bank of New York, 55 Wall Street, New York, N. Y. Nature of application: Mortgage insurance and loan insurance. The proposed loan: (a) Types of loan (state whether mortgage or other type of loan) The loan is divided into three parts: 1. A loan of $3,180,000 ($1,060,000 per vessel) during construction from the insurance company (which will be a second lien obligation unsecured by Government insurance), this money to be advanced ahead of any bank money; 2. An interim loan of $21,540,000 ($7,180,000 per vessel) for progress payments for the construction in an American shipyard of three tankers of 25,500 deadweight tons, the total cost of which will be approximately $24,720,000 or $8,240,000 per vessel; and |