A U.S. agency rejected American Petroleum Tankers Parent LLC’s application for $340 million in taxpayer-backed loan guarantees, expressing concern about whether the money-losing company could repay the debts.
The amount the tanker owner sought also would have drained remaining money in the loan-guarantee program, known as Title XI, without providing economic benefit to U.S. shipyards, Maritime Administration chief David Matsuda said in a letter to Robert Kurz, American Petroleum’s chief executive officer.
“Even if Marad approved the loan guarantee, such that APT benefited from a lowerinterest rate, APT would have difficulty repaying its loan,” Matsuda said in the letter yesterday, calling the proposal “economically unsound.”
The denial comes two weeks after American Petroleum, owned by affiliates of Blackstone Group LP (BX) and Cerberus Capital Management, sued the U.S. government, alleging its application was being delayed because of fallout from the bankruptcy of Solyndra LLC. The solar-panel maker had received a $535 million loan guarantee from the Department of Energy.
American Petroleum alleged that the department refused to act because of its ownership by affiliates of private-equity funds. In the lawsuit, the company asked a judge to direct the U.S. Department of Transportation, which includes the maritime agency, to either grant or deny the loan application.
Matsuda in his letter opened the door to reconsidering the application, saying the agency didn’t have time to review an amended filing submitted on July 30. The agency by law had to rule by Aug. 31, two years after the original application was filed.
“We’re studying the decision and analyzing our options,” Peter Rose, a spokesman for New York-based Blackstone Group, said in an interview.
Before Solyndra’s bankruptcy, the Maritime Administration had been criticized by U.S. lawmakers from both political parties for delays in evaluating applications under Title XI, which is intended to bolster domestic shipyards by backing financing for vessel purchases. U.S. taxpayers cover 87.5 percent of the amount of the loans guaranteed.
Overseas Shipholding Group Inc. (OSG) in February withdrew an application for a $241.8 million loan guarantee to help pay for two tankers built at U.S. shipyards after Bloomberg News reported that OSG ships were calling at Iran’s largest oil terminal and House Majority Leader Eric Cantor asked the Transportation Department to reject the application.
American Petroleum Tankers, based in Plymouth Meeting, Pennsylvania, charters ships to BP Plc (BP/), Chevron Corp. (CVX), Marathon Oil Corp. (MRO) and the U.S. Navy. Its naval contracts, which accounted for 49 percent of the company’s revenue in 2011, are at risk because of possible military budget cuts, Matsuda said in his letter, which was posted on the agency’s website.
The company reported losses of $42.4 million in 2010, $35.6 million in 2011 and $11 million in the first quarter of 2012, according to documents filed with the Securities and Exchange Commission.