Forum Report: Regulatory Context of Reported Acquisition

Resolution of Shareholder Interests

In March 2007, the controlling shareholder of Crowley Maritime offered $2,990 per share to buy out public investors, a price equal to 258% of the last traded price of shares when the Forum started in April 2004.

Note: The Forum report copied below refers to a previously distributed July 22, 2004 Reuters article about Crowley Maritime's agreement to purchase the Alaskan fuel distribution business of Adsteam Marine Ltd. (Australia:ADZ.AX). Crowley Maritime reported the agreement in a Form 8K filing with the SEC later in the afternoon of July 23rd.

The article included with the Forum report had appeared in TradeWinds, the shipping industry publication. The weekly paper and its associated web site provide regular coverage of developments concerning Crowley Maritime and other water transportation companies.

From: Gary Lutin

To: Distribution: Crowley Maritime Forum

Sent: Friday, July 23, 2004 12:22 PM

Subject: Regulatory context of Crowley's purchase of Alaskan operation

The article copied below, relating to last night's Reuters report of Crowley's agreement to purchase Adsteam's Alaskan fuel distribution business, appeared as a sidebar in the March 12, 2004 issue of TradeWinds, the shipping industry publication.

Also relating to the regulatory context of this acquisition, there was a relevant provision in a "Coast Guard and Maritime Transportation" bill (HR 2443) passed by the House yesterday -- immediately after the Stock Option Reform Act, for those of us who have been watching that. The bill included an exception to its Section 608 requirements of U.S. citizenship in a subsection titled "Treatment of Owner of Certain Vessels," defining the excepted person as one which "derives substantially all of its revenue from leasing vessels engaged in the transportation or distribution of petroleum products and other cargo in Alaska." (See H6030 of the July 20, 2004 Congressional record, which I can provide upon request in the form of a 278KB PDF file.) I understand from someone familiar with the industry that the exception could apply only to the operations being acquired by Crowley.

Gary Lutin
Lutin & Company
575 Madison Avenue, 10th Floor
New York, New York 10022
Tel: 212-605-0335
Fax: 212-605-0325
Email: gl@shareholderforum.com

By Bob Rust, Oslo

published: 12 March 2004

Battle flares up to bung the Adsteam loophole

Lease financing of vessels has offered an opening for repeated foreign incursions into the protected Jones Act or domestic-trading US fleet. But defenders of US cabotage now think regulators may finally have succeeded in patching the fence.

We think the new rules would put the genie back in the bottle, Washington lobbyist Michael Roberts told TradeWinds. Lawyers at the US Maritime Administration (MarAd) and the US Coast Guard (USCG) have spent years trying to fine-tune the relevant regulations.

Roberts, a partner in maritime law firm Thompson Coburn, represents San Francisco-based Crowley Maritime and has helped lead the long-term push for tighter rules to keep out lower-cost foreign competition.

Part of the solution involves putting less emphasis on explicit rules. Maritime regulators will gain more discretion to decide whether the intent of charter arrangements is merely financial or whether they aim to give foreign owners effective control over US tonnage.

The problematic effort to open the Jones Act to foreign finance but not to foreign ownership goes back to a 1996 law that let foreign companies own the tonnage if they were primarily engaged in leasing or other financial transactions . Using the so-called Adsteam manoeuvre, opportunistic foreign owners took this language quite literally by setting up subsidiaries that bought Jones Act-qualified ships, leased or bareboat-chartered them out to special-purpose US citizen outfits, then time-chartered them back again. Besides Australian towing giant Adsteam, Houston-based oil-drilling giant Nabors Industries Inc and French offshore operator Surf, a division of Groupe Bourbon, availed themselves of the Adsteam manoeuvre or variations on it.

Adsteam itself, less expansive these days, is now trying to shed part of its bold Jones Act punt through a sale to none other than Roberts s client Crowley. The sale of tank-barge unit Yukon Fuel to Crowley is the subject of a pending anti-trust action in Alaska.

US maritime unions among others agree with Roberts that MarAd and the USCG have done a good job of plugging the Adsteam loophole. But the rules have left BP Shipping in a panic over the security of its huge investment in the Jones Act tanker fleet (see main story).