Bollinger Shipyards on Sunday evening said it has agreed to acquire VT Halter Marine and ST Engineering Halter Marine Offshore (STEHMO) in a deal that would give it the Coast Guard’s Polar Security Cutter (PSC) program, expand its work with the Navy, and enlarge its manufacturing and ship repair footprint.
Singapore’s ST Engineering
, which owns Mississippi-based VT Halter Marine and STEHMO, said it is selling the shipyards for $15 million on a cash-free and debt-free basis. The deal includes an earnout provision of up to $10.25 million subject to the award of certain future shipbuilding contracts to Halter Marine and the contracts meeting required operating profit margins.
The two shipyards have lost a combined $256 million from 2017 through 2021 with annual net losses ranging from about $40 million to $60 million, ST Engineering says.
The transaction is expected to close during the fourth quarter of 2022.
For Bollinger, which already builds the Coast Guard’s fast response cutters (FRCs), the deal would expand its work with the service to include the PSC, which is on the front end of its acquisition life-cycle. VT Halter Marine is already under contract for the first two of at least three PCs, although construction has yet to begin on the first heavy icebreaker.
Early in 2022, then Coast Guard Commandant Adm. Karl Schultz said the first PSC is expected to begin construction this year with delivery in 2025. The second PSC is supposed to be delivered in 2026.
The Coast Guard originally expected the first PSC to be delivered in the first half of 2024 with the potential to accelerate delivery into late 2023. However, the program suffered delays due to the COVID-19 pandemic and the Government Accountability Office warned in early 2021 that the ship’s design faces maturity challenges.
In addition to the PSC, VT Halter Marine is also constructing the Auxiliary Personnel Lighter-Small berthing and messing barges for the Navy.
STEHMO includes a 546-foot-long dry dock, structural steel processing shops, and a pipe shop.
Both shipyards in Pascagoula, Miss., and two dormant shipyards north of the city, cover 378 acres and will be renamed Bollinger Mississippi Shipbuilding and Bollinger Mississippi Repair. The Pascagoula facilities’ have direct, deep water access to the Gulf of Mexico.
So far, Bollinger has delivered 50 FRCs of a planned program purchase of 65 of the 154-foot cutters.
Bollinger is also contracting with the Navy on the Mine Countermeasures Unmanned Surface Vessel and the Towing, Salvage and Rescue Ships. The company is under contract to General Dynamics [GD] to build a floating dry dock and a pontoon launcher to support construction and launching of the Navy’s Columbia-class ballistic missile submarines.
Ben Bordelon, president and CEO of Bollinger, said in a statement that the acquisition “is strategic as it further strengthens our position in the industry and U.S. defense industrial base by allowing Bollinger to expand our footprint, capabilities and suite of innovative solutions that we can provide to our customers. From day one, the Bollinger team will leverage our proven and best-in-class management team, operational excellence and existing capability to ongoing commercial and government programs, especially the Polar Security Cutter program.”
The losses at the Pascagoula shipyards led ST Engineering to auction the properties as part of a regular portfolio review to focus on businesses the company considers strategic and “yield higher returns,” it said.
Macquarie Capital is ST Engineering’s financial adviser on the deal.
Halter Marine’s PSC design is based on the 460-foot German Polarstern II double-hulled icebreaker used for research in the Arctic. The Coast Guard currently operates two polar icebreakers, the 399-foot Polar Star, a heavy icebreaker, and the 420-foot Healy, a medium vessel. The Polar Star was commissioned in 1976 and is undergoing a series of service life extensions to keep it operating until later this decade.