East Isle yard wins tug order

The Prince Edward Island government in Canada is lending $3.6 million to the Quebec towing company Ocean Group Inc so it can order two new tugs from East Isle Shipyard in Georgetown.

Ocean is the principal provider of towing services in the Port of Quebec, but also carries out maritime services throughout Canada. The total value of the contract is more than $18 million.

While the province has loaned money to Irving-owed East Isle Shipyard before to build new boats, this is one of the first times the province has handed cash directly to an out-of-province purchaser. Dennis King, a spokesman with the Department of Development, described it as a “creative deal” put together to ensure the work remained in Prince Edward Island and was not lost to shipyards in other parts of the world who were also vying for the work. “It?s a guaranteed interest-baring loan over five years, which is secured by the ships themselves,” King said.

Ocean already purchased a tugboat built at East Isle in Georgetown, which carried a purchase price of nearly $10 million. That purchase was funded through private money.

This deal adds two more Georgetown-built vessels to Ocean?s fleet and the company has plans for a fourth tug in 2009 although financing is not yet in place for that. The province said it is prepared to discuss further financing with Ocean.

East Isle Shipyard employs about 130 employees and has an annual payroll of about $10 million. King said he?s convinced if the province had not stepped in and helped finance the tugboats, the contracts would have gone not only to another province but to another country.