The moisture-filled air had a sparkly quality to it when Koko and I went out walking this morning, just in time to see the sun rise and turn that sparkle pink-gold. But the most stunning sight of all was Waialeale, which kept me mesmerized, standing there all agog, as it went through a light-induced metamorphosis that took it, within the course of several minutes, from flat blue to silver-green to a mosaic of moss green, brown and deep blue, all softened by a veneer of yellow.
As we all watched, the Hawaii Superferry went through its own dramatic transformation in a process that was not nearly so swift or pretty. Initially billed as a state-of-the art, affordable alternative for inter-island travelers and goods, it sharply divided the islands, provoked protests and a “unified command” response, had our governor and legislators doing back flips to please it, generated god knows how many reams of legal documents and finally was fully repudiated by the courts for its bold and brazen attempt to circumvent the state’s environmental laws. Yesterday, in the latest chapter of a saga that’s not quite over yet, it filed for Chapter 11 in the U.S. Bankruptcy Court in Delaware.
It’s really no surprise that it’s come to this. When the Hawaii Supreme Court issued its final ruling that shut the big boat down, both the state and company officials kept up the charade that it might be back when the EIS was pau.
I don’t imagine many thinking people believed that — which raises the question of whether DOT’s Mike Formby is a dunce or aspiring actor. We already know that Sen. Sam Slom, who continues to maintain that the court’s decisions were wrong, is a complete idiot.
Although HSF executives like to blame the Court and environmental activists for its financial woes, in truth, the Court’s decision was a way out for a company that never had a viable business model as a passenger ferry and was losing money on a daily basis in the Islands.
According to an Advertiser article, HSF just couldn’t scrape together enough work elsewhere in time to pay its bills:
"As a direct result of the Hawai'i Supreme Court decision last March, Hawaii Superferry had to shut down operations. There has been no relief from that decision," Superferry said in a statement. "With no ability to operate, the company has had no revenues, only ongoing expenses to maintain the vessels Alakai and Huakai, our second ship.
"Our recent objective was to charter the ships outside of Hawai'i, which would keep Hawaii Superferry operating at some capacity. Although there are potential charter opportunities around the world, they take time and haven't materialized in time for the company to meet its required financial obligations. Our efforts to refinance and restructure the company for this interim period with additional investment have not been successful, as yet. Accordingly, a filing of Chapter 11 was an unavoidable next step."
Doesn’t it strike you as a bit odd that it wasn’t preparing for such a contingency when its case was before the Hawaii Supreme Court — a panel that had previously rejected its claim that an EIS wasn’t needed — instead of waiting until the decision was rendered?
Unless, of course, bankruptcy better serves the company’s purposes. The Maritime Association, which originally secured loans of $143 million for the venture, holds first mortgage on the boats. HSF also owes $22.9 million to Austal USA, which built the two ferries — and won a lucrative contract to build JHSVs in the process — and holds a second mortgage. Leasing the vessels to the military would work well for those two entities and primary investor JF Lehman, who currently has both boats in his Mobile, Ala., shipyard, while leaving the State of Hawaii, smaller investors and service providers holding the bag.
As I outlined in a previous post and Maui Tomorrow detailed in a letter to the Maui News, the state is paying dearly for its decision to jump on board the Superferry. (Hmmm, I wonder if the state will end up having all the court-ordered legal costs.)
State auditor Marion Higa in her official audit of the Superferry boondoggle, hinted at the unfortunate and expensive outcome of the state's tumultuous affair with the ferry:
In the end, the state may have compromised its environmental policy in favor of a private company's internal deadline," state auditor Marion Higa concluded. "It remains to be seen whether these decisions will cost the state more than its environmental policy."
So when the final costs are tallied, let's not forget who answered the door and said "come in" when the snake oil salesmen came calling.
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18 comments:
"Unless, of course, bankruptcy better serves the company’s purposes. The Maritime Association, which originally secured loans of $143 million for the venture, holds first mortgage on the boats. HSF also owes $22.9 million to Austal USA, which built the two ferries — and won a lucrative contract to build JHSVs in the process — and holds a second mortgage. Leasing the vessels to the military would work well for those two entities and primary investor JF Lehman, who currently has both boats in his Mobile, Ala., shipyard, while leaving the State of Hawaii, smaller investors and service providers holding the bag."
Each chapter in the HSF story has the same overarching theme: "self-serving business entity avoids responsibility for its actions."
The biggest revelation seems to be that the state held a mortgage on the boat. A mortgage indicates partial ownership doesn’t it? As far as I know the state consistently denied it had any ownership.
now we can run off those free riders at PMRF!
A mortgage does not confer ownership unless and until there is default and the lender exercises the right to take the collateral. Until then, it is not accurate to say that a lender has an ownership interest in collateral.
PMRF is the only thing that keeps that part of the island clean and little used.
The road to Polihale wasn't open a month before people trashed the water system.
Re: "...which raises the question of whether DOT’s Mike Formby is a dunce or aspiring actor..."
I think Mike is just staking out a legal position in case of litigation. Mike is not dumb. He just has to toe the Lingle line. She's the dumb one.
"...the Court’s decision was a way out for a company that never had a viable business model as a passenger ferry and was losing money on a daily basis in the Islands."
Yes.
"Doesn’t it strike you as a bit odd that it wasn’t preparing for such a contingency when its case was before the Hawaii Supreme Court — a panel that had previously rejected its claim that an EIS wasn’t needed — instead of waiting until the decision was rendered?"
Joan, conventional wisdom was that they would not lose the case. Even the Asst. AG was not prepared for the case. They didn't think they had to be because they figured it was a given that they would win. Only a few people who had read the detail of Act 2 thought DOT/HSF could lose this.
"Unless, of course, bankruptcy better serves the company’s purposes...JF Lehman, who currently has both boats in his Mobile, Ala., shipyard, while leaving the State of Hawaii, smaller investors and service providers holding the bag."
Bankruptcy could work out well for some of those parties on this.
"So when the final costs are tallied, let's not forget who answered the door and said "come in" when the snake oil salesmen came calling."
Yep.
Joan wrote: "...was fully repudiated by the courts for its bold and brazen attempt to circumvent the state’s environmental laws."
I think your blame is totally misplaced. To pin the tail on the donkey remember this; It was not HSF's "bold and brazen attempt to circumvent the states environmental laws", (they are not an enforcement entity). Place the blame where it belongs on the VAST MAJORITY of your elected and non-elected officials for THEIR "bold and brazen attempt to circumvent the states environmental laws". It is the nature of corporations to do whatever the law allow. The state allowed it.
There was no bold and brazen attempt to circumvent the environmental laws. That's a shiboleth from the true believer Super Ferry hater party/religion. The finding that harbor improvements were so minor as to fall under 343's exception was entirely reasonable.
Go ahead. Rain down moral indignation. No religion lasts long without moral indignation.
HSF filing for bankruptcy;par for the course. still divisive after all these years. will we start talking about a REAL inter island transport system now?
"will we start talking about a REAL inter island transport system now?"
canoes? No thanks.
Can't drive a company out of business, cheer when you've succeeded in closing it down, and then whine that they left you holding the bag.
Haven't you heard of the key (for owners, anyway) to float a new biz venture???
OPM - other people's money
Investors in start-up's face risk of losing all their investment. That's the buy-in price for wanting to be possibly rewarded if the company succeeds.
Maybe Hawaii should have invested in a seemingly more stable, profitable enterprise....GM for example?
HSF filing for bankruptcy = a victory for all those who predicted it
yes those 40 million dollars worth of "minor" harbor improvements. Just keep swallowing the lies brah.
The third mortgage that the state holds on the Alakai isn't a loan, it's security against payments to the state called for in the Operating Agreement between the state and the Superferry corporation. At first, when I heard about the 3rd mortgage and asked the state for a copy, I thought it was like a home mortgage. They sent me the document and explained the difference. This was posted in an article I wrote in November 2007. It didn't matter until now, and so now the question is, I guess, what good is this 3rd mortgage at this point? And will Lingle pursue it if it has potential value?
"yes those 40 million dollars worth of "minor" harbor improvements. Just keep swallowing the lies brah."
You like to focus on the 40 million number cause it looks so big. 343 doesn't say, "if you spend 40 mill you have to get an EIS." It says minor improvements are exempt.
You gotta look at what the improvements are. They were parking lot striping, setting up semi-permanent tents and running electrical power to them.
That, my brah, is minor, I don't care how much it cost.
"That, my brah, is minor, I don't care how much it cost."
There's a sucker born every minute.
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