All systems go

A fledgling Jones Act operator has firmed up a $250m contract to construct a pair of product tankers at Aker Philadelphia Shipyard.
Kristian Rokke: Making his name with Aker Philadelphia.

Kristian Rokke: The architect of Aker Philadelphia's foray.

Philly Tankers, which is backed by the same US yard where the order was placed, put pen to paper after securing the support of the builder’s Oslo-quoted compatriot.

On Thursday American Shipping Company (ASC) confirmed that shareholders approved its board’s request to participate in the transaction during a vote held earlier this week.

As TradeWinds has reported Aker Philadelphia plans to plough roughly $58.5m into Philly Tankers and ASC intends to contribute approximately $25m.

Funds controlled by affiliates of Apollo Global Management and institutional investors that are based in the US but haven’t been identified by name are kicking in another $34m.

When the scheme started to take shape last month the sponsors of the deal said the 50,000-dwt vessels, which will cost $125m a piece, are due for delivery in early 2016 and 2017.

If Philly Tankers exercises options to construct two more medium-range product carriers the additional units would likely follow in the third and fourth quarters of 2017.

In June Aker Philadelphia noted shares would likely start to trade over-the-counter in Oslo this month and indicated that the pursuit of a US listing could begin in 2016.

At the time this came as welcomed news to investors who are on the lookout for ways to cash in on the shale oil revolution, which has pushed rates for Jones Act tankers to new heights.

While some are applauding the formation of Philly Tankers critics are concerned that its vessels could disrupt the delicate balance between supply and demand for domestic tonnage.

Opponents note that most of the Jones Act orders sealed in recent years were inked after their owners lined up charters, an approach that has helped protect freight rates in a niche market that is susceptible to even the slightest change due to its size.

It isn’t clear whether Philly Tankers has already lined up fixtures for its first pair of ships but many believe the vessels are being built on spec, a strategy that industry veteran Joseph Pyne cautioned against at the TradeWinds Jones Act Forum in New York just last year.

Aker Philadelphia is one of two US shipyards that are actively building Jones Act product tankers and containerships. Today, the company's backlog includes contracts to construct four 50,000-dwt units for Crowley Maritime and a pair of 3,600-teu boxships on behalf of Matson.

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