Significant Progress Made on the Conversion of the Fjord

Fairmount Heavy Transport NV (FHT) says significant progress has been made towards completing the conversion of the Fjord into a self-propelled heavy transport vessel.

All three engines have been successfully started and the company is working closely with technicians from Wartsila to finalize the commissioning of the ship's propulsion system. The ballast system is finished and will be tested during sea trials. DNV is onsite regularly, inspecting the ship and providing Malta Shipyards with the necessary guidance required in order to obtain class certification. FHT does not anticipate any problems with the class certification process. The accommodation decks are near completion. The original accommodation subcontractor, MSC Europe, filed for receivership in the UK two weeks ago. McGill has stepped in to the project to complete the work of MSC and has done an excellent job under difficult circumstances to finish the accommodation scope.

MSC Europe had also been contracted to work on the Fjell. This will no longer be the case and a substitute for this work will be determined shortly. MSL has presented FHT with a series of Variation Orders that are being disputed by FHT.

The total of these disputed Variation Orders is approximately E10 million. FHT has tried to come to a commercial settlement of this dispute. There is now a reasonable likelihood that this dispute will move towards arbitration in Holland under the TAMARA rules. FHT is required under the conversion contract to post a performance guarantee equivalent to the disputed amount in order to sail from Malta. Kaupthing Bank has agreed to issue this performance guarantee on behalf of FHT. This will ensure that in the event of a dispute there will be no legal or contractual impediments to restrict the Fjord from sailing.

The management of FHT is highly confident that the arbitration process will be favorable to FHT and the company is well prepared to defend FHT's position against MSL.

Sea trials for the Fjord are expected to begin on November 4th.