[ NOL Statement on The Disapproval of Lykes’ Request ]

In response to inquiries received after the announcement that the U.S.
Maritime Administration has disapproved the request of Lykes Lines fo
r the transfer of its Maritime Security Program Operating Agreements,
NOL would comment as follows:
“There are significant differences between the Lykes bankruptcy restr
ucturing and NOL’s proposed merger with APL Limited.
APL’s notice of transfer seeks to implement the ownership and structu
re approved in-principle by the Maritime Administration in a January 2
1, 1997 letter to APL, and is fully consistent with both the Maritime
Security Act of 1996 and the Coast Guard Authorization Act of 1996.
APL expects to file its notice with the Maritime Administration shortl
y and believes that it will be seen as furthering the interests of a s
trong U.S. merchant marine.
NOL and APL continue to expect to consummate our merger in the third q
uarter of this year following receipt of regulatory approvals.”
The Press Statement B97 068 issued by the US Department of Transport M
aritime Administration is enclosed.
Maritime Administrator Albert J. Herberger informed Lykes Bros. Steams
hip Co., Inc., that he has disapproved the proposed transfer of Lykes
’ operating agreements under the Maritime Security Program(MSP) to a
newly formed U.S. company which would time charter its vessels to a su
bsidiary of Canadian Pacific Limited(CP). The Maritime Subsidy Board s
imultaneously disapproved the transfer of Lykes’ operating differenti
al subsidy(ODS) contract on the same grounds.
The proposed transaction would have resulted in excessive foreign cont
rol over U.S. flag ships participating in the new Maritime Security Pr
ogram, Herberger said. MARAD cited reasons for rejecting the transfers
in a letter to Lykes.
Lykes operates U.S. flag containerships in the North Atlantic trade. O
n December 20, 1996, MARAD awared MSP agreements for three of its vess
els.
Canadian Pacific subsequently offered to purchase Lykes’ assets, othe
r than the vessels and subsidy contracts, and to time charter the vess
els from a surviving reorganized company. The proposal was subject to
MARAD’s approval.
herberger said the parties worked hard to address MARAD’s concerns. I
n the end, however, the level of foreign control over maritime securit
y fleet vessels was too significant, and he could not approve the tran
saction.
Lykes’ three MSP agreements and one ODS contract remain in effect wit
h Lydes as the owner and operator of these fourvessels.
Herberger emphasized the unique complexity of issues considered in the
proposed transfer and stated that any other planned transactions invo
lving foreign participation in U.S. flag companies covered by MSP agre
ements would be decided on the specific facts in each case.