What are the Superferries Worth?

SUBHEAD: They are worth more than the $150 million that MARAD misstates it is out. They're worth no less than $160 million.

Image above: The first Hawaii Superferry, Alakai, docked. From (http://www.jaunted.com/story/2010/3/23/215315/730/travel/The+Hawaii+Superferry+Continues+To+Annoy+All+Long+After+Its+Death).

By Brad Parsons on 22 August 2010 in HI Superferry -

(http://hisuperferry.blogspot.com/2010/08/what-are-hawaii-superferries-worth.html)

There is a new KITV report on a MARAD official's statements yesterday in Honolulu on the expected auction of the two Hawaii Superferries here and here. In those reports the MARAD official is quoted as saying the lien that MARAD has on the vessels is a total of $150 million.

The report further quotes,

"'I can tell you we already have a $150 million lien on both ships. So, you can of course, provide a cash bid higher than that amount and take ownership of both the Alakai and the Huakai,' said Matsuda. Matsuda was in Honolulu Friday for the groundbreaking ceremony for the renovation of the Pier 29 container yard at Honolulu Harbor. The project is funded with federal stimulus money. Matsuda said Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Hold that thought. You can look a number of places to try to find what the two Superferries actually cost to build including all the nice extras in the interiors and things added later like the Whale detection systems to the Alakai and the ramp, wastewater treatment, and desalination plants added to the Huakai. A simple place to look is Wikipedia which says each vessel's total costs were $88 million each, here and here. Of course that's just Wikipedia and the Huakai's costs were at least $5 million more than the Alakai. But a quick thumbnail estimate is that the combined cost for the two was at least $181 million new before depreciation.

Hold that thought.

Now, it took a little bit of hunting but we went back and looked at some of the early Bankruptcy Court filings, and it looks like the outstanding senior lien that MARAD has on the two vessels is actually closer to $140 million, not $150 million.

Additionally Guggenheim Corporate Funding, LLC has a lesser priority outstanding lien of about $48 million and Austal had an even lower priority lien of about $22 million. The State of Hawaii was junior to them. Austal wrote off their loan as a loss. Guggenheim's lien was "secured" in equity. It is understood that all equity holders lose their money on this.

So the key takeaway on the liens is that MARAD's is $140 million, not $150 million and that Guggenheim also has a lien and would be out $48 million. The total of those two adds up to $188 million, only slightly more than what the two vessels originally cost to build.

Hold that thought.

Now, let's got back to that MARAD official's quote about $150 million. First of all, does MARAD determine and run the auction? NO, they do NOT. It is the Bankruptcy Court that does that. The MARAD official's comment, "So, you can of course, provide a cash bid higher than that amount ('$150 million') and take ownership of both the Alakai and the Huakai,' said Matsuda," is not something that MARAD will determine and is misleading.

First of all, MARAD's outstanding lien is $140 million, and NOT $150 million and more importantly because these ships are possibly worth closer to $180 million than $150 million, but also because it is not for MARAD to say what exact dollar figure will be enough to take ownership of the two vessels, that's the purvue of the Bankruptcy Court. So, what are these ships worth? Well, it's somewhere between $150 and $180. They have a tax depreciable life of at least 20 years, even though the Huakai is almost like brand new and should not be depreciated as much as the Alakai.

The Alakai, if you will remember, had significant damage to the rudder, was run aground going into drydock, and fell off it's blocks in drydock. But, if they were both actually being used continuously over the past 2 to 3 years, then the total depreciation on $180 million would be about $4.5 million for the Huakai and about $13.5 million for the Alakai for a total of about $18 million off of $180 million equaling about $162 million, which is about what these two vessels are really worth, leaving $140 million for MARAD, not $150 million, and the other $22 million for Guggenheim, recovering almost half of their potential loss. Keep in mind, to build these brand new for commercial use would be at least $90 million each and also the builder Austal is being paid about $180 million to build just one of these very similar ships for the U.S. military as a JHSV. Our conclusion is then that these two vessels together are worth no less than $160 million total. Their actual worth is probably a little more than that. We would expect Guggenheim to be a bidder on this in addition to MARAD. We believe MARAD will actually be satisfied to recover their $140 million, but we also believe MARAD when they say the, "Maritime Administration wants the Superferry vessels for military and humanitarian projects."

Now, let's see if somebody gets 'em for less than that? By the way, Mufi, your cheap friends aren't in the running.

See also:

Ea O Ka Aina: Mufi's Superferry Plans Sinking 8/22/10

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Mufi Superferry Plans Sinking

SUBHEAD: Federal government expects to outbid all at ferry auction. Hannemann plan to revive Superferry sinking fast.

Image above: The former Hawaii Superferry Huakai delivering aid to Haiti. From (http://hmshaiti.com/2010/02/09/former-superferry-delivers-in-haiti).

By Denby Fawcett on 21 August 2010 for KITV 4 News -

(http://www.msnbc.msn.com/id/38804489) Gubernatorial Candidate Mufi Hannemann (D) has touted reviving the bankrupt Hawaii Superferry as one of the cornerstones of his economic revival plan. Hannemann made the proposal last month when he announced his 10 point plan to stimulate Hawaii's economy. Hannemann said he had talked to a group of private investors eager to revive the inter-island ferry service. But U.S. Maritime Administrator David Matsuda said Friday the Maritime Administration expects to be the winning bidder when the Superferry vessels are put up for auction. Matsuda said he doubts any private bidder could compete to buy the ships. The two ferry boats are now docked in Norfolk, Va., awaiting sale at an auction. They are under the oversight of the U.S. Maritime Administration after the Hawaii Superferry filed for bankruptcy in July 2009. Matsuda said Friday, "The Maritime Administration is planning to bid on the vessels on behalf of the federal government, given the investment we have made, and we expect that to happen any time in next month or so."

The Maritime Administration was left holding the bag for $150 million in loans it guaranteed for the Superferry's construction. Matsuda said the only way for a private investor to buy the Superferry vessels would be to bid more than $150 million.

"I can tell you we already have $150 million lien on both ships. So, you can of course, provide a cash bid higher than that amount and take ownership of both the Alakai and the Huakai," said Matsuda.

Matsuda was in Honolulu Friday for the groundbreaking ceremony for the renovation of the Pier 29 container yard at Honolulu Harbor. The project is funded with federal stimulus money. Matsuda said Maritime Administration wants the Superferry vessels for military and humanitarian projects.

"They are extremely versatile as we saw the military successfully activate them for use in the response to the earthquake in Haiti. We saw what they can do," said Matsunda.

A source who knows the Hawaii investors who want to bring back the Superferry said they were counting on a fire sale, and hoped to pay no more that $40 million for each vessel.

Hannemann Campaign spokeswoman Carolyn Tanaka said Hannemann is aware that others are interested in buying the Superferry, and that he is just waiting for the process to play itself out.

See also:

Ea O Ka Aina: Mufi's Superferry Musings 8/18/10

Ea O Ka Aina: Compare Mufi & Neil 8/18/10

Ea O Ka Aina: Mufi's Republican Connections 8/8/10

Ea O Ka Aina: Mufi, Duke & Evangelism 7/30/10

Ea O Ka Aina: Mufi's Superferry Dreamin' 7/27/10

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Mufi's Superferry Musings

SUBHEAD: Hannemann's comments about the Superferry reveals much about the man and how he would evaluate and determine policy. Image above: Mashup of Mufi by Juan Wilson superimposed over Jonathan Jay photo of Superferry on trial run to Kauai. By Brad Parsons on 18 August 2010 for the Maui News - (Submitted as an Op-Ed to the Maui News) Regarding the Maui News interview "Hannemann talks about action plan" by Chris Hamilton from Aug. 18, 2010, a few points from that need to be clarified and expanded upon. The Maui plaintiffs lawsuit wasn't what killed the Superferry, it was HSF's own financial losses even when they were operating. Surprisingly HSF was never actually compelled to cease operations nor even to leave the state. In fact there were some state policymakers who thought HSF could have used the second vessel with it's own ramp to operate to Kauai and the Big Island while they waited on the EIS to be done. On Hannemann's comments about a new environmental impact statement, DOT officials have said they plan to reuse the information from the Act 2 EIS that they already spent almost a million dollars to document. Hannemann doesn't say whether he would rescope that, particularly important because the prior two vessels were financially and logistically unsuccessful with the route requirements. Hannemann did say "he'd favor a public-private partnership that likely involves using the currently bankrupt company's two giant high-speed catamarans to transport military personnel on leave between islands." HSF was already transporting military personnel on leave, and it wasn't making a difference with their bottom line. Maybe Mufi should have just straight up said, "transport military personnel and their equipment on assignment between islands for training purposes." But why does a cash strapped state need to get involved in that when the Feds have the resources to handle it? Mufi also said, "It would free up a lot of lines at the airport." Not really, it never did. HSF did a small fraction, less than 10%, of the business that the airlines do. As for the Superferry's supposed economic benefit, remember a business does not produce an economic benefit unless it can first sustain itself. Some Maui farmers were using it, and they are now using Aloha Air Cargo with no problem. The fishermen, contractors and small-business who were using it were mostly from Oahu. It should be no surprise that the Oahu Development Board, Enterprise Honolulu, lobbied hard for HSF and was putting out narrow (and what turned out to be inaccurate) economic forecasts on it as far back as 2003. With his statements on the Superferry, Mufi Hannemann gives the knowledgeable voter good insight into Mufi's detached thought processes. The same processes he would use to try to solve any other problems, such as the solid waste, wastewater, and rail problems that he left unresolved in Honolulu. But, are the voters paying attention? See also: Ea O Ka Aina: Mufi's Superferry Dreamin' 7/27/10 Hannemann Wants To Revive Hawaii Superferry: Opponent Abercrombie Called That A Fantasy (KITV, 7/26/2010) Candidates for governor pitch economic plans (AP, 7/26/2010)

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SOURCE: Dick Mayer (dickmayer@earthlink.net) SUBHEAD: If elected Mufi Hannemann promises in the first 3 months to become the champion of bringing back the Superferry. A conversation with Mufi Editorial by the Publisher on 19 August 2010 for the Maui News - (http://www.mauinews.com/page/content.detail/id/534548.html) Mufi Hannemann would like to bring the Superferry back. The former mayor of Honolulu and current Democratic candidate for governor stopped by The Maui News Tuesday to talk story and introduce himself. When asked how he could revive the Superferry when environmental groups on Maui fought so hard to put it in dry dock last time, Hannemann said the whole process would have to begin anew. He said he would not push it if there was evidence the community was not behind it. But Hannemann emphasized he thought having the transportation alternative for farmers, families and business people was well worth going through the effort again. He promised to follow an exhaustive process beginning with community meetings, then going on to the completion of a brand-new environmental impact statement. Hannemann said that, if elected, he'd begin work on the Superferry revival within his first three months. He said the reason it failed last time was that shortcuts were taken - an EIS wasn't done before the ferry sailed - and, very simply, he didn't believe the Superferry had someone to champion it. He promised to be that champion. The ex-mayor pointed to his success in getting rail passed on Oahu as proof he could lead a successful transportation project. While he wouldn't predict how long it would take to get the Superferry going again, he said he was able to get the rail project under way in five years when the average for such an effort is 14. When asked if he agreed with his opponent, Neil Abercrombie, that a financially successful Superferry would require a public and private cooperation including the military, Hannemann replied that he was certain there would be help from the public sector. On other transportation issues, Hannemann said that as governor he would make sure that funds for capital improvement projects like roads, harbors and airports were released in economically challenging times. He pointed out that he has already awarded two contracts for the rail project on Oahu - and, that because of the down economic times, they came in $150 million under budget. Hannemann views such leadership as creating a win-win situation - people are put to work and the public saves money on the contracts. Tomorrow: Conversation with Mufi, Part II - schools and governmental budgeting.

See also:

Ea O Ka Aina: Compare Mufi & Neil 8/18/10

Ea O Ka Aina: Mufi's Republican Connections 8/8/10

Ea O Ka Aina: Mufi, Duke & Evangelism 7/30/10

Ea O Ka Aina: Mufi's Superferry Dreamin' 7/27/10 .

Mufi's Republican Connections

SUBHEAD: Hannemann tries to scrub his relations with the George W. Bush Administration and his other Republican connections. Image above: Photo of puppets representing Democrats seeking approval from Republicans. Source unavailable. By Andrew Walden on 7 August 2010 for Hawaii Free Press - ( http://www.hawaiifreepress.com/main/ArticlesMain/tabid/56/articleType/ArticleView/articleId/2621/Mufirsquos-Republican-Army-The-Bush-Family-Connection.aspx) For someone seeking the Democratic Gubernatorial nomination, Mufi Hannemann’s campaign sure has a lot of current or former Republicans among its leadership. And it starts at the top. Mufi’s personal GOP connections lead straight to the Bush family and go back three decades. In the early 1980s, Hannemann abandoned a job in the Ariyoshi administration to run to Washington, DC and work in the Reagan-Bush administration as as a staff assistant to Vice President George H. W. Bush. After George W. Bush became President, Michael Moore produced a movie arguing that “Bush is worse than bin-Laden”. Hawaii Democrats wrote a platform plank calling for impeachment. Not Hannemann. He went back to DC; working for the administration of George W. Bush in the US Department of Labor between his loss to Jeremy Harris in the 2000 Honolulu mayoral election and his successful 2004 Mayoral election win. That's not all. Hannemann’s campaign chairman Dean Okimoto is called a “big Dem” by some who know him. But on April 24, 2006 he contributed $250 to the National Republican Congressional Committee. Hannemann campaign has paid $22,500 to Harvey Harlowe Hukari of Political Communications, a San Francisco-based public relations company. Hukari’s online bio outlines his extensive work on Republican campaigns: Direct mail consultant to Honolulu Mayor Mufi Hannemann, the first Samoan to serve as mayor of a major American city. (2004 & 2008 campaigns) Engineered the direct mail campaign for the re-election of (Republican) Honolulu Mayor Frank Fasi (1988) General consultant to (Republican) Congresswoman Pat Saiki, the first Republican from Hawaii to serve in the House of Representatives. (1986 & 1988 campaigns) Created the Republican National Committee's direct mail program in support of the Reagan/Bush '84 campaign. Created the Republican National Committee's Master Ethnic Surname File - the most commonly occurring surnames in America categorized by ethnicity - for voter contact targeting. Direct mail consultant to (Republican) Congresswoman Patricia Saiki, the first Japanese-American Republican to represent Hawaii; (Republican) Ileana Ros-Lethtinen, the first Cuban-American elected to Congress; Mufi Hannemann of Honolulu, the first Samoan-American to become mayor of a major American city and (Republican) Craig Thomas of Wyoming, the 10,623rd white male to serve in the United States House of Representatives. Okimoto and Hukari were among six key Hannemann operatives the Abercrombie campaign pointed to as being tied to the famous (or infamous) AtomicMonkey website. Another, Jeff Coelho, works for Salem Communications, owner of several Christian-oriented radio stations. On Aug 30, 2008, Coelho gave $207 to Salem's Corporate PAC which in turn gave contributions only to Republican candidates in the 2008 cycle. Coelho served in 2005-2006 as Mufi's city managing director--the #2 position in the City. Coelho had in 2002 run fifth for Council against the late Barbara Marshall. Also tied to AtomicMonkey by the Abercrombie campaign, California-based political consultant Shellie Garrett described herself in one article on her work for a Republican in the 1984 San Francisco Supervisor's race as "the National Republican Voter Contact Services Representative." She is a former Executive Director of the San Mateo County CA Republican Party whose experience includes managing the successful 1979 special election Congressional campaign of San Mateo CA Republican Bill Royer. At the center of the Atomic Monkey maelstrom is long time political operative Keith Rollman. Volcanic Ash columnist David Shapiro profiled Rollman in a July 12 column. Elements of Rollman’s career track closely with Hukari’s. Among the tidbits included in Shapiro’s column: “(Rollman) worked mostly for Republican candidates before hooking up with Mufi Hannemann’s mayoral campaign in 2004… “Rollman…was a paid consultant to the 2004 Hannemann campaign before taking an $85,000 city job after Hannemann defeated Duke Bainum. “He first made a name for himself as a political consultant working in Fasi’s mayoral campaigns; Hawaii Business credited Rollman for the “negative campaigning” in 1984 that helped Fasi make a comeback as a Republican convert and regain the city’s top job from Eileen Anderson, who had taken it from him four years earlier. “In 1994, Rollman stuck with the Republicans and their candidate for governor Pat Saiki as media adviser when Fasi left the GOP and ran a third-party campaign against Saiki and Democrat Ben Cayetano. “Rollman backed Republican Orson Swindle’s campaign to unseat Abercrombie from Congress. “Rollman was quoted as a media adviser for Peter Carlisle when he first won the city prosecutor’s job in 1996 and for Republican Gene Ward in his 1998 run against Abercrombie, of whom Rollman has said, ‘I have known and disliked Neil Abercrombie since before Mufi Hannemann was out of high school.’ “This year, he was in the middle of a dispute over the Hannemann campaign’s allegedly high-handed behavior at the state Democratic convention, which caused party chairman Dante Carpenter to rebuke the mayor. “Rollman, who was a delegate to the convention, posted a stinging retort to Carpenter on this blog: ‘There is little tolerance for any ‘Democrat’ not willing to tow the liberal mantra of the Neil Abercrombie zealots who have taken over the party. What used to be the ‘big tent’ is now a rather ingrown clique with some very radical views. I don’t think they represent the more patriotic AJA Democrats I know, the typical union workers or a majority of the more moderate and independent individuals who still consider themselves Democrats. To quote an old adage…we didn’t leave the party, the party left us.’ “More than a few Democrats found it cheeky for a guy who spent all those years working to elect Republicans to present himself as the voice of old-line Democrats.” How will they feel about voting for a candidate who spent all those years as part of the Bush administration?

UPDATE: Two references which cite Hannemann’s service to the George W Bush administration:

http://www.greatergoodradio.com/?p=152

“In the administration of President George W. Bush, Hannemann served in the United States Department of Labor as a member of the President’s Council on the 21st Century Workforce.”

http://www.citymayors.com/mayors/honolulu-mayor.html

“10 March 2008: Honolulu’s first mayor of Samoan descent, as well as the second Mormon to hold the office, Mufi Hannemann is unusual in having worked for all US presidents from Jimmy Carter to George W. Bush….

“Hannemann was also appointed to government service in the first administration of George W. Bush, serving in the Department of Labor as a member of the President’s Council on a 21^st Century Workforce.”

But in Hannemann’s official campaign biography, his service to the administration of George W. Bush is conveniently omitted and he claims to have worked under only FOUR Presidents, instead of five:

“This Harvard-educated leader and former star athlete has the distinction of having served in the administrations of four U.S. Presidents: Jimmy Carter, Ronald Reagan, George H.W. Bush and Bill Clinton.”

This omission is repeated at least twice on Mufi’s campaign website in the following locations:

See also: Ea O Ka Aina: Mfui, Duke & Evangelism 7/30/10 http://www.mufihannemann.com/about-mufi.html http://www.mufihannemann.com/hannemann-forms-statewide-committee.html