Great Lakes Dredge & Dock Co has pulled back the curtain on issues at Hanwha Ocean takeover target Philly Shipyard.
In a lawsuit filed in US federal court this week, the Texas-based dredging contractor alleged that the beleaguered Kristian Rokke-backed shipbuilder was diverting resources from its $197m subsea rock installation vessel (SRIV) to government-backed projects.
The complaint, filed in the US court for the Eastern District of Pennsylvania, read: “Great Lakes’s patience has reached its end, because it recently became apparent that Philly’s pattern of false promises, failure to take seriously its contractual commitments and breaches of the [vessel construction agreement] threatened to irreparably harm Great Lakes.”
Great Lakes alleges that the offshore wind-focused SRIV was initially due to be finished on 15 November, but Philly Shipyard began filing change orders on the project pushing the delivery date into February 2025.
It said the yard has filed further change orders and two force majeure claims — all of which Great Lakes rejected — that would push delivery back until September 2026.
Allegedly, the shipyard has only one full-time employee on the project, with everyone else splitting time between the SRIV and the US government contracts.
Great Lakes did not specify what ships Philly Shipyard was building for the government, but it is working on three remaining mariner training vessels in a series of five for state-run merchant marine academies.
The dredging company said Philly Shipyard now intends to float the unfinished SRIV into the harbour to accelerate other projects, a move Great Lakes opposes, saying it could damage the vessel while diverting further resources away from it.
It is asking the court to stop the move and force the yard to speed up work on the SRIV.
The contract, which includes an option for a second vessel, was awarded in November 2021 and was seen as further momentum for the long-troubled shipyard after the $1.5bn training vessel contract.
In the run-up to the training vessel contract, the yard had been idle for months.
But the lawsuit also alleges that Philly Shipyard’s proposed schedule during the bidding process did not meet Great Lakes’ requirements, causing the yard to drop out before re-entering with a new, shorter schedule.
In a regulatory filing in Norway on Friday, Philly Shipyard acknowledged the lawsuit and said it continued work on the SRIV, the mariner training vessels and a container ship for Matson.
In its third-quarter earnings report, the shipyard said the SRIV was a loss-making project, following delays and cost overruns that it insisted were beyond its control and that it was seeking financing to complete its orderbook.
Earlier, it had disclosed the mariner training vessels were loss-making for similar reasons.
The shipyard, long mired by a lack of commercial shipbuilding activity in the US and the subject of two taxpayer-backed bailouts, had complained about difficulties in recruiting the manpower to meet demand.
On Friday, the company said it still expects its takeover by Hanwha to close in the fourth quarter.
The sale was announced in June, with Rokke’s Aker Capital taking $100m as the South Korean conglomerate looks to expand its defence and shipbuilding capabilities.
