Northeast Ship Repair, the Boston-based firm that has been
stripping aged Navy guided-missile frigates at the old Philadelphia Navy Yard
under an $8.5 million government contract, has been sold for about $18.5
million to a Radnor investment firm and its partners.
"It's a good investment: There are maybe five dry docks
on the East Coast that can handle ships 750 feet or bigger, and they're not
building any new" installations, said Andrew Panzo, general partner at
NewSpring Capital in Radnor.
Northeast Ship Repair is the owner of Philadelphia Ship
Repair, which is doing the salvaging work here, and another unit called Boston
Ship Repair.
NewSpring bought 42 percent of Northeast Ship Repair, which
has leased Dry Dock No. 2 at the Philadelphia yard, and a second dock in Boston
from J.H. Lehman & Co., the New York investment firm headed by John Lehman,
a Philadelphia native who served as secretary of the Navy in the Reagan
administration.
Plexus Capital, of Raleigh, N.C., bought another 42 percent.
Northeast president Ed Snyder and other managers and private investors bought
the rest.
Under the federal Jones Act, Navy vessels have to be
repaired and repainted regularly at U.S. facilities, Panzo said. Northeast Ship
Repair is removing engines, propellers, and other key equipment from aging
frigates and other decommissioned ships, after which they will be scrapped. The
Navy says it hopes to save as much as $100 million by using the old parts on
other frigates, including some it plans to sell to friendly European, Asian,
and Latin American navies.
The ship repair company employs about 100 union tradesmen
from several locals at its Philadelphia dock, one of five at the Navy Yard
site. The frigates are expected to keep the dock busy for the next year. The
Navy stores everything from an aircraft carrier to transport ships at the
Reserve Basin next door, and is slowly salvaging, selling, or scrapping them
and moving in new ships as they become obsolete.
NewSpring backs a mix of software, business services, and
manufacturing firms.
"We believe this is a very good investment for our
mezzanine [midlevel] fund," Panzo added. "We have a captive audience
in the U.S. government. We plan on working with management to build out the
commercial side further. This is not a business where there will be a ton of
growth. You can only bring one ship into a dry dock at a time."
Source: Philly.com
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