Cleanup Agreement for Todd Site Clears Way for Its Reopening

The Port of Los Angeles, in deals designed to clear the way for a new shipbuilding firm to lease the closed Todd Shipyard, has decided to pay millions of dollars to clean up metal and fuel contamination at the site, a port official said. Under the agreements, the port will take responsibility for the cleanup and receive the equivalent of $10.5 million from Todd and the firm that will take over the yard.

Estimates of the cost of the cleanup have reached $20 million, though port officials this week refused to discuss a specific figure.

The agreements probably mean that the San Pedro-based North American Shipbuilding Inc. will begin operating a ship-repair facility at the site within two months, said a company official.

Tay Yoshitani, the port’s deputy executive director for maritime affairs, defended the port’s willingness to pay for a substantial part of the cleanup as the only way to avoid delays. Todd had sought protection from its creditors in August, 1987, when it filed for bankruptcy under Chapter 11 of the federal bankruptcy code. Todd officials have said the dispute with the port over the environmental cleanup has threatened the entire reorganization plan.

Yoshitani said the agreement with Todd “gives us the option to get the shipyard operating again as quickly as possible. If this thing had gone into the bankruptcy court, it could have been tied up for years.”

Now that the port has reached an agreement with Todd, North American spokesman Jack Taylor said his company, which is in the final stages of negotiating a lease with the port, might begin operations within weeks. Both sides declined to discuss the rent.

Taylor said North American intends to hire back some of the hundreds laid off in July when Todd shut down the 112-acre site it had leased from the port for 47 years.

“We have to watch it closely (because) profit margins are close, (but) it is going to be fun,” Taylor said. “When it all shakes out, I think we are going to have a happy place to work.”

In the agreement with Todd, which was approved last week, the port will receive $2.5 million in cash, plus all of the equipment at Todd’s former site. Yoshitani said the equipment is worth about $6.5 million. In return, the port will release Todd from further responsibility for the cleanup.

Yoshitani and Taylor said that they had not yet reached agreement on the rent but that the company had agreed to purchase all of Todd’s equipment for $6 million and to do $2 million worth of cleanup under the direction of the port.

North American is seeking to rent a 55-acre section of the shipyard.

Yoshitani said the full cost of decontamination is expected to amount to much more than the money that North American and Todd would provide.

“We believe it is well in excess of $10 million,” he said.

“It becomes the port’s responsibility. However, . . . if it can be proven that other parties besides Todd are responsible, then we will take the appropriate measures to get reimbursed.”

Word of the agreement with Todd drove up the firm’s stock, which had been trading at $3.50 a share. It went up 75 cents on Monday, leading the New York Stock Exchange as the biggest percentage gainer for the day. On Tuesday, it rose another 37 1/2 cents, posting the seventh largest percentage gain for the day. The stock lost 25 cents on Wednesday and Thursday, closing at $4.37.

Taylor said that the cleanup would not delay reopening the portion of the yard that North American intends to lease.

North American was formed to acquire the Todd shipyard when it became apparent that Todd was in financial trouble. Among the firm’s principals are retired Rear Adm. Stuart Platt and Vice Adm. Harry Schrader.

Taylor said that the streamlined shipyard will have the capacity to build new ships, but its main business, at least initially, will be maintenance and repair of ships up to 700 feet long. To compete for Navy contracts, North American wants to hire some former Todd employees, Taylor said.