State enters negotiations to sell Malaspina

The Malaspina of the Alaska Marine Highway System.

The state has started negotiations to sell the Malaspina to a company owned by a business that operates a new multimillion-dollar cruise ship terminal at Ward Cove in Ketchikan.

M/V Malaspina LLC and the Alaska Department of Transportation “have agreed to negotiate in good faith on the sale of the 59-year-old vessel,” the state announced Monday.

“MVM’s letter of interest outlines a plan to use the Malaspina to showcase Alaska’s maritime history and support a Ketchikan-based tourism business,” the state said. “Among other uses, they propose keeping the Malaspina in Ketchikan and using the vessel as a maritime museum. They also propose to explore opportunities for the ship to serve as a training facility for the University of Alaska’s Maritime Training Center in Ketchikan.”

MVM was one of four companies that submitted proposals to take ownership of the Malaspina, which has been tied up unused in Ketchikan for more than two years. The Transportation Department did not release any information about the proposals other than the corporate names until it announced MVM’s selection.

The state’s request for proposals said the responses “shall be held confidential until the state closes the sale of the Malaspina.”

Transportation Department spokesman Sam Dapcevich last week said the four companies that submitted proposals are: MVM, Alaska-based Cannery Row Inc., Alabama-based Meridian Global, and India-based Highseas Ltd.

MVM was incorporated and obtained an Alaska business license as M/V Malaspina LLC on March 7, the deadline for offers on the ferry. State records list Ward Cove Dock Group as 100% owner of MVM.

MVM’s agent in state records is John Binkley, who also owns half of the Ward Cove Dock Group with the Spokely family of Ketchikan. The state is paying the partnership to store the Malaspina and other idled marine highway vessels.

Binkley did not return a phone call to the Sentinel. Binkley is a former Alaska cruise industry official.

The Ward Cove Dock Group converted the former Ketchikan Pulp Mill Co. property in Ketchikan into what the company calls The Mill at Ward Cove, with a dock and welcome center focused on cruise ship traffic.

The Binkley family and the Spokelys formed the Ward Cove Dock Group in 2019. The cost of building the dock, cruise terminal and welcome center has been estimated at about $50 million. It opened last summer. The center will feature retail space, a theater and dining, along with cultural displays.

The state gave interested parties less than three weeks to submit proposals to take ownership of the 408-foot-long ferry, capable of hauling 450 passengers and about 85 cars. The notice went out Feb. 18 and offers were due March 7.

In its letter soliciting interest in the vessel, the Transportation Department asked for “a detailed description of your company’s ownership; a detailed description of your company’s intentions for purchasing Malaspina; indicate where the vessel will be residing; documentation demonstrating that you are technically and financially capable of relocating, refurbishing, operating and maintaining the vessel; (and) any considerations to preserve the vessel’s historical value and positively promote the Alaska Marine Highway System.”

None of that information has been released to the public.

The state limited its offer of the Malaspina “to U.S. buyers that intend to retain the ship in Alaska.”

The notice also said, “Letters of interest that propose scuttling the vessel are not being considered at this time.”

CoastAlaska public radio reported last week that a 2021 BBC news investigation found that Highseas had bought a historic British ocean liner at auction. Despite saying the ship would be used as a floating hotel in Dubai, the vessel was broken up for scrap.

The state in 2018 sold the Taku, which was built in the early 1960s, same as the Malaspina, for $171,000 to a Dubai-based company that took the former Alaska ferry to India where it was dismantled for scrap.

The Transportation Department under Gov. Mike Dunleavy has been culling the fleet to cut costs, getting rid of ships it no longer uses. The state about a year ago sold its two fast ferries, the Chenega and Fairweather, built at a combined cost of $68 million less than 20 years earlier, for just over $5 million to a Mediterranean-based catamaran operator.

Almost a year ago, an official said the department had considered turning the Malaspina into an artificial reef. Sinking the ship could make long-term financial sense, the deputy commissioner told a legislative committee last March.

The Malaspina needs at least $16 million in steel work to go back into service, plus new engines at a cost of several tens of millions of dollars, according to the Transportation Department, which has kept the vessel tied up at Ward Cove since December 2019 at an expense of about $75,000 a month for insurance, mooring fees and other costs.

An owner of another bidder, Cannery Row, told public radio that he and his wife own a waterfront restaurant in Cordova, and the Malaspina could be set on tidelands at a former cannery property they own and its staterooms used as a floating hotel.

Meridian Global Consulting, a Mobile, Alabama-based firm, said in its letter to the state that it owns three vessels of similar size and would use the Malaspina as a floating hotel and restaurant in Alaska, according to the CoastAlaska report.

Meridian Global last year offered the state $625,000 for the ship, before the Transportation Department set up a public bidding process, planning to use the old ferry to house security contractors working to protect international shipping off the Horn of Africa.