PhillyDeals: Radnor investment firm buys Northeast Ship Repair

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