Rand Logistics Purchases Three Vessels From Wisconsin And Michigan Steamship
Rand Logistics Inc. recently announced that its wholly-owned subsidiary, Grand River Navigation, has exercised its option to purchase three vessels from Wisconsin and Michigan Steamship ("WMS"), the David Z., the Earl W. and the Wolverine, for an all-in cost of approximately $20M in cash. One of the three vessels purchased has subsequently been sold to the Company's Canadian subsidiary for Canadian registry and deployment.
Rand's subsidiary, Lower Lakes Transportation, had been operating the vessels under a long term charter agreement with WMS since August 1, 2006. The time charter agreement provided Rand the option of purchasing the vessels at any time during the charter period.
Laurence S. Levy, Chairman and CEO of Rand, said, "By purchasing the three vessels, we will be able to eliminate both the operating and accounting complexities associated with the time charter. This acquisition represents a significant opportunity for future profit growth through the elimination of duplicate overhead and the full integration of the vessels into Rand's fleet, resulting in more cost efficient operations. By consolidating the results of these vessels we are able to present a more transparent financial picture for our business by eliminating the Variable Interest Entity reporting line from our income statements."
Due to Lower Lakes' time charter agreement with WMS, WMS was considered a variable interest entity in accordance with FASB Interpretation ("FIN") 46R, which requires the Company to consolidate certain entities even though the Company does not hold any ownership interest in the entity. Following consummation of the acquisition, financial results for the three vessels will now be consolidated into Rand's financial results.
About Rand Logistics
Rand Logistics, Inc. is a leading provider of bulk freight shipping services throughout the Great Lakes region. Through its subsidiaries, the Company operates a fleet of ten self-unloading bulk carriers, comprised of nine River Class vessels and one River Class integrated tug/barge unit, and three conventional bulk carriers, of which one is operated under a contract of affreightment. The Company is the only carrier able to offer significant domestic port-to-port services in both Canada and the U.S. on the Great Lakes. The Company's vessels operate under the U.S. Jones Act – which dictates that only ships that are built, crewed and owned by U.S. citizens can operate between U.S. ports – and the Canada Marine Act – which requires Canadian commissioned ships to operate between Canadian ports.
SOURCE: Rand Logistics Inc.