Point shipyard to be revived

Barletta Willis hopes to create 1,500 jobs in next three years

It buys yard for $9.25 million

Boston firm to pump $200 million into facility

November 08, 2003|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

A Boston investment group plans to revive the defunct Baltimore Marine Industries Inc. shipyard in Sparrows Point, creating up to 1,500 jobs over the next three years and using the 250-acre waterfront facility to its full capacity to build barges and repair and build light ships.

Robert Willis, a principal with Barletta Willis LLC , said the new owner plans to restart operations at the former Bethlehem Steel shipyard by April, employing 300 to 500 workers in the first year alone. It expects to begin with work on barges.

"We are a maritime user, and there will be a shipyard operations there," Willis said. "It's really an amazing asset. We're anxious to really use it the way it can be used."

The BMI shipyard shut down at the end of October after filing for bankruptcy protection last summer. The yard had stopped most work by June, when it laid off more than 200 employees. The U.S. Bankruptcy Court subsequently ordered it auctioned.

The property, with its mile-long waterfront, was attractive because it had been a functioning shipyard - mostly for ship repairs, maintenance and scrapping, Willis said. His company, which plans to hire a shipyard operator or create a joint venture with one, plans to pump about $20 million into the site initially to make it operational but envisions a long-term investment of about $200 million over five years.

The Baltimore shipyard represents one piece of Barletta Willis' larger strategy to own and operate several shipyards on both coasts. The company has an option on another shipyard and is negotiating to buy two others, said Willis, who would not disclose their locations.

Willis said his team could make a go of a failed shipyard by "packing a couple more lines of business into the yard, trying to bring some additional users into more space than we're likely to consume," as well as by making investments well beyond the purchase price.

"BMI's basic business was fine, it was all maritime," he said. "It was just occupying a small percentage of the actual facility. Industrial properties require density, just like large skyscrapers," he said.

The Barletta half of the investment team is a Boston civil engineering and heavy industrial business called the Barletta Cos. Willis, who has a background in venture capital and technology, is handling the financing. The group expects to close on the sale in January.

Under Barletta Willis, some work at the yard will also involve building specialty boilers that generate electricity. Willis also sees the property being leased for general industrial use, as well as by companies that may need to ship products or raw materials occasionally. Willis said his company also hopes to open a small vocational school on site.

"We can build a vibrant manufacturing and industrial community out there centered around the maritime function," he said.

Barletta Willis was one of five serious bidders at Wednesday's sale. The Boston company paid $9.25 million for 150 acres, plus piers, basins and dry dock and $2 million in equipment, including vehicles, pumping tugs, metal and woodworking equipment and cranes, said Gilbert Schwartzman, a senior vice president for Michael Fox International Inc., the auctioneer.

"Our charge was to try to find someone who wanted to buy the whole ball of wax," Schwartzman said. "All the creditors felt that would be the best way to maximize the return. If we could do that, hopefully, we'd be able to retain a valuable asset to the city of Baltimore and to the employment community."

Among BMI's largest creditors are Heller Financial Inc., a subsidiary of GE Capital Corp., which was owed $6.2 million, and the state of Maryland, which had extended $4 million in loans.

Unsecured creditors, owed between $10 million and $12 million, are expected to be repaid 30 cents to 50 cents on the dollar, said Alan Grochal, an attorney with Tydings & Rosenberg who represents the unsecured creditors' committee.

"We are ecstatic," Grochal said. "We had ideas of what the sale process was going to bring early on. This exceeded our expectations. The auctioneer did a magnificent job. There was a lot of interest."

The 113-year-old shipyard employed 8,000 at its peak in 1943 during World War II. It built its last ship in the 1980s, and then shifted its focus to ship repair, maintenance and scrapping in the 1990s as the shipyard industry contracted. It was part of Bethlehem Steel as Bethship until 1997, when the steelmaker sold the yard to Veritas Capital, a New York private investment firm, for $17 million. Veritas operated it as BMI.

BMI, which at one point employed nearly 800 workers, blamed its woes on the Iraq war. As Navy ships were deployed abroad, work dried up. It lost $4.8 million in 2002 and an additional $4.25 million through May.

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