U.S. EXPORT-IMPORT BANK FINANCING FOR DRILLING EQUIPMENT

Shipowners around the world have long used export credit agencies (“ECAs”) of various countries to aid in financing vessels constructed in those countries. ECAs have also been used to finance major vessel components exported to be incorporated in vessels constructed in other countries. Of course, the United States has its own export credit agency, the Export-Import Bank of the United States (“Ex-Im Bank”). Although Ex-Im Bank has always had the ability to finance the export of ships and drilling rigs, historically, the U.S. Maritime Administration (“MarAd”) was more active in this financing through its Title XI program. That program, now seldom used for a variety of reasons, provides financing for vessels constructed in the United States. Although originally restricted to U.S. flagged vessels, the United States made a valiant effort in the mid- 1990s to export the Title XI program. In 1994, the statute was amended to permit MarAd to finance U.S.-constructed vessels for export. At that time, Title XI was attractive for its very long maturities: up to 20 years for tankers and 25 years for dry cargo ships. The effort created the opportunity to build the so-called double eagle tankers at Newport News, which are part of today’s Seacor fleet. Eventually, Newport News proved unable to construct the vessels at a profit and withdrew from the business of building commercial ships.

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