Vulcan Carriers, Ltd.; Application for Waiver Under Section 804 and for Written Permission Under Section 805(a) of the Merchant Marine Act of 1936, as Amended

DEPARTMENT OF TRANSPORTATION

Maritime Administration

[Docket S-909]

Vulcan Carriers, Ltd.; Application for Waiver Under Section 804

and for Written Permission Under Section 805(a) of the Merchant Marine

Act of 1936, as Amended

Pursuant to sections 804 and 805 of the Merchant Marine Act of

1936, as amended, (Act), the current and future shareholders of Vulcan

Carriers, Ltd. (Vulcan), by letter dated July 12, 1994, request a

waiver under section 804 and permission under section 805 to own a

fraction of one percent of the shares of stock in OMI Corp. (OMI) for

some or all of the limited period of time remaining during which Vulcan

will be receiving Operating Differential Subsidy (ODS) pursuant to

Operating Differential Subsidy Agreements (ODSA), Contracts MA/MSB-167

(a), (b), (c), and (d).

Vulcan advises that this request is being submitted in order to

permit the sale of Vulcan from Captain Jack Gordon, the current

president of Vulcan, to Captain Enrico Fenzi. Vulcan advises that its

request for approval of the sale of Vulcan to Captain Fenzi under

section 608 of the Act was submitted to the Maritime Administration on

June 9, 1994.

Vulcan states that its request of July 12, 1994, is being submitted

because the purchaser of the Vulcan stock is a retired former employee

of OMI who is entitled to receive upon his retirement shares of stock

purchased for him by the trustee of OMI's Employee Stock Ownership Plan

(ESOP). The seller of the Vulcan stock also is seeking approval of the

ownership of an even smaller amount of OMI stock (approximately .007%)

which he purchased unaware that approval was required.

Vulcan advises that Captain Fenzi, the purchaser of Vulcan, is a

retired former vice president of OMI Corp. As an employee of OMI,

Captain Fenzi became vested in OMI's ESOP. OMI no longer has a separate

defined benefit pension plan for its employees. The ESOP acts as the

primary pension benefit available to OMI employees along with a 401(k)

program which became effective July 1, 1993, and which currently

provides minimal lump sum distribution on an employee's retirement. As

an eight-year employee of OMI prior to his retirement, Captain Fenzi is

the beneficiary of 38,248 shares of OMI stock currently held by the

trustee of the ESOP.\1\ Upon application to transfer these shares to

him, the stock would be transferred to him as his main source of

pension income from OMI or for his ``rollover'' into other pension

assets. If Captain Fenzi were to retain all of these shares of stock,

they would constitute one-tenth of one percent (0.1%) of the

outstanding shares of OMI stock.

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\1\As an employee who retired in 1994, Captain Fenzi will be

entitled to one more distribution of stock through the ESOP at the

end of the year. The number of shares to be provided to 1994

retirees is not determined until that time. This request therefore

covers all shares of stock available to Captain Fenzi through his

participation in the ESOP.

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Vulcan advises that during his employment at OMI, Captain Fenzi,

like all other senior management employees at OMI, was also eligible

for stock options pursuant to three separate option plans governing the

grant of stock options as a portion of an employee's compensation.

Captain Fenzi received his first grant in 1986 and continued to receive

them though his time at OMI. However, during his entire tenure at OMI,

Captain Fenzi never exercised any option to purchase additional stock,

nor does he have any immediate plans to do so. Nevertheless, Captain

Fenzi is eligible to exercise options on up to 41,882 shares of OMI for

the next one to three years. Captain Fenzi requests permission to

include these options in this approval to ensure all potential

purchases are covered, even if not contemplated. In the highly unlikely

event that all of these options were exercised, Captain Fenzi's holding

would constitute only (at most) 0.2% of the outstanding shares of OMI

stock.

Vulcan advises that Captain Gordon was also a retiree of OMI at the

time he established Vulcan. At or near the time of the creation of

Vulcan, Captain Gordon sold the OMI stock he received through the ESOP

for other retirement investments, but over the last several years,

Captain Gordon has purchased on the open market or received through

option exercises a total of 2,243 shares of OMI stock. (At this time,

Captain Gordon no longer retains any right to exercise options for the

purchase of additional OMI stock.) Captain Gordon's shares represent

.007% of the shares of OMI stock. Captain Gordon requests approval of

his ownership of this stock retroactive to the dates of purchase

through the date of sale of Vulcan.

Vulcan states that OMI currently operates only four U.S.-flag

vessels in the coastwise trade. OMI operates, on a spot market basis, a

crude oil carrier in the Alaska trade and three chemical product

carriers in the coastwise trade. OMI's other U.S.-flag vessels (three

bulk carriers and four product tankers) operate in the foreign trade.

OMI also operates 34 foreign flag tankers, dry bulk vessels, and

liquefied petroleum gas carriers (28 are owned, often with joint

venture partners, and six are chartered in).

Vulcan states that approval for the ownership of these shares of

stock is being requested for a limited period of time (until the sale

of Vulcan is completed or until the termination of the ODSAs) and under

special circumstances that are very limited in scope. Ownership by

Captain Fenzi and Captain Gordon of such a small portion of the shares

of a publicly traded company would not result in unfair competition to

any U.S.-flag operator either an avenue by which such subsidy could be

``leaked'' to OMI. Vulcan states that based on these special

circumstances and upon the lack of any competitive disadvantage to any

U.S.-flag operator, a waiver of section 804(a) and granting permission

under section 805(a) would not be contrary to the objectives and

policies of the Merchant Marine Act.

This application and Vulcan's application of June 9, 1994, may be

inspected in the Office of the Secretary, Maritime Administration. Any

person, firm or corporation having any interest in the application of

July 12, 1994, within the meaning of section 804 or section 805(a) of

the Act and desiring to submit comments concerning the application,

must file written comments in triplicate with the Secretary, Maritime

Administration, Room 7300, Nassif Building, 400 Seventh Street, SW.,

Washington, DC 20590. Comments must be received no later than 5:00 p.m.

on July 22, 1994, including petition for leave to intervene under

section 805(a) of the Act. Any petition for leave to intervene under

section 805(a) of the Act shall state clearly and concisely the grounds

of interest, and the alleged facts relied on for relief.

If no comments are received within the specified time, including

any petition for leave to intervene under section 805(a) of the Act, or

if it is determined that such petition does not demonstrate sufficient

interest to warrant a hearing, the Maritime Administration will take

such action as may be deemed appropriate.

(Catalog of Federal Domestic Assistance Program No. 20.804

Operating-Differential Subsidies).

By Order of the Maritime Administration.

Dated: July 13, 1994.

Joel C. Richard,

Secretary, Maritime Administration.

[FR Doc. 94-17436 Filed 7-15-94; 8:45 am]

BILLING CODE 4910-81-M