Farrell Lines Incorporated; Notice of Application for approvals to the proposed transfer of Maritime Security Program Operating Agreements MA/MSP-18 through 20

By applications dated June 1, 2000, Farrell Lines Incorporated (Farrell) and counsel for FLI Ships, Inc. (FLI Ships) have notified the Maritime Administration (MARAD) of the proposed transfer of three Maritime Security Program (MSP) Operating Agreements (MA/MSP-18 through 20) from Farrell to FLI Ships, a wholly owned subsidiary of Farrell, pursuant to section 652(j) of Subtitle B, Title VI, Merchant Marine Act, 1936, as amended (1936 Act). The vessels currently covered by those contracts are presently owned by FLI Ships, and will continue to be covered by those contracts after transfer.

The transfer of MSP Operating Agreements MA/MSP-18 through 20 is part of a series of overall transactions whereby Farrell will merge with P & O Nedlloyd Acquisition Corporation, a wholly owned subsidiary of P & O Nedlloyd Limited. After merger, Farrell will be the surviving entity (reconstituted Farrell).

With respect to the transfer of MSP Operating Agreements, section 652(j) of the 1936 Act provides that “A Contractor under an operating agreement may transfer the agreement (including all rights and obligations under the agreement) to any person eligible to enter into that Operating Agreement under this subtitle after notification of the Secretary [of Transportation] in accordance with regulations prescribed by the Secretary, unless the transfer is disapproved by the Secretary within 90 days after the date of Notification. A person to whom an Operating Agreement is transferred may receive payments from the Secretary under the agreement only if each vessel to be covered by the agreement after the transfer is an eligible vessel under section 651(b).”

In implementing the proposed transaction, FLI Ships is to be spun off by sale of all its stock to FLI Ships Holdings, Inc. (Holdings), a U.S. citizen corporation within the meaning of section 2 of the Shipping Act, 1916, as amended. Holdings will be independently capitalized and operationally independent of P & O Nedlloyd Limited and any of its affiliates. The MSP vessels will be time chartered from FLI Ships to either P&ONL FAME, Inc. (FAME), a U.S. documentation citizen owned by P & O Nedlloyd B.V., a Dutch corporation, or to a reconstituted Farrell for operation. In the event that Farrell becomes the time charterer, it will also become a documentation citizen. The time charters of two other MSP vessels owned by First American Bulk Carrier Corp. (FABC) and chartered to Farrell, will be novated to either FAME, or remain with the reconstituted Farrell for operation. FLI Ships will manage and operate the former Farrell vessels utilizing former Farrell personnel. The FABC vessels will continue to operate under their existing charters. One additional vessel operated by Farrell under bareboat charter from MARAD may be turned back to MARAD subject to settlement under that charter. Another vessel bareboat chartered by Farrell under a sale/leaseback agreement will most likely be paid off and scrapped.

A redacted copy of the transfer application will be available for inspection at the Department of Transportation (DOT) Dockets Facility and on the DOT Dockets website (address information follows). Any person, firm or corporation having an interest in this proposal, and desiring to submit comments concerning the application, may file comments as follows. You should mention the docket number that appears at the top of this notice. Written comments should be submitted to the Docket Clerk, U.S. DOT Dockets, Room PL-401, Nassif Building, Department of Transportation, 400 Seventh Street, SW, Washington, D.C. 20590. Comments may also be submitted by electronic means via the internet at http://dmses.dot.gov/submit/. You may call Docket Management at (202) 366-9324. You may visit the docket room to inspect and copy comments at the above address between 10 a.m. and 5 p.m. EDT, Monday through Friday, except holidays. An electronic version of this document is available on the World Wide Web at http://dms.dot.gov. Comments must be received by close of business June 14, 2000.

This notice is published as a matter of discretion, and the fact of its publication should in no way be considered a favorable or unfavorable decision on the application, as filed, or as may be amended. MARAD will consider all comments submitted in a timely fashion, and will take such action thereto as may be deemed appropriate.