Company

The Realization of America's Marine Highway

Structure

The essence of the Jones Act determines the structure of the AFL venture. AFL wants to have the option to raise capital for its ships from U.S. and non U.S. sources. In the past, the Jones Act limited foreign participation to a maximum of 25%. However, since 1996, foreign financing of more than 25% is possible if the ship owning entity is a purely passive finance or leasing vehicle, leasing the ships on bareboat charter to a Sec. 2 U.S. citizen controlling, managing and operating the ships.

This scheme is called the "Foreign Lessor Exemption" and AFL will use it to structure its business and the financing of its ships. This structure allows for the needed flexibility in financing AFL’s assets. The bareboat charter between AFLH and AFLO stipulates the rules and terms of the services to be rendered by AFLO.

Leasing

AFLO will comply with the U.S. Jones Act and operate under a bareboat charter to avoid ownership and management issues.

Sales

AFL plans to work with existing partners to coordinate the logistical requirements for selling container spots on each ship.

Purchasing

AFLH currently has LOI’s signed with two major U.S. shipyards to build 5 vessels each. AFL will monitor container traffic and vessel utilization over the first three years of AFL’s existence to establish the proper purchasing processes going forward. AFL anticipates that once the Marine Highway system is in place, the Company will continue to expand and order more ships as its service network expands. It is estimated that eventually a total fleet of between 30 and 50 modern Feeder ships will be needed to properly service a fully functioning U.S. coastal Marine Highway as well as replace the existing Jones Act fleet.

Feeder Operations

AFL will draw on its extensive connections with international liner companies and global network to coordinate its feedering operations. AFL will not have local portside offices across its system but instead will take advantage of existing offices that exist in all the ports AFL plans to call on.

Short Sea Operations

AFL will coordinate its Short Sea/Feeder operations with regional shipping companies that regularly service the areas/ports upon which AFL plans to call. By working with these local shipping companies and local port operators directly, the Company will quickly create the required service network between local ports along the USEC and USGC.