NEW YORK -- U.S.-flag operator American Classic Voyages reached an
agreement with Northrup Gruman Corp., parent company of
Mississippi-based Ingalls Shipbuilding, that will allow work to
continue on two 1,900-passenger ships Ingalls is building for ACV.
The agreement was endorsed by the U.S. Maritime Administration
with the support of U.S. Secretary of Transportation Norman Mineta,
according to a joint statement issued by Northrup and ACV.
Under the terms of the agreement, the vessels' delivery dates
were extended by 12 months to Feb. 1, 2004 and Feb. 1, 2005.
Also, the project's price tag was increased by $19 million to
about $459 million to cover "costs of the interior finishing
package," according to the statement.
The design of the ships is "virtually complete," according to
the statement, and work on the first vessel is one-third complete.
Furthermore, ACV has committed $42 million and Northrup Gruman $44
million to acquire through 2005 a new issue of stock in ACV's
Project America subsidiary."
The equity will be used to "help offset the price increase and
associated costs for the delivery extensions" and provide
"additional funding" for the ships.
The agreement does not increase the $1.1 billion loan guarantee
provided by the Maritime Administration. Last month, ACV and
Northrup entered discussions following criticism from Sen. John
McCain (R.-Ariz.), who complained that the over-budget and
behind-schedule project might collapse, leaving U.S. taxpayers
holding the bag.
Project America is being funded in part through federal loan
guarantees provided under the Title IX program.