NewSpring, Plexus pay JHLehman $18.5M for Northeast Ship Repair

Northeast Ship Repair, the Boston-based firm that's been stripping old U.S. Navy ships at the old Philadelphia Navy Yard, has been sold for around $18.5 million to a Radnor investment firm and its partners.

"It's a good investment: there are maybe five dry docks on the East Coast that can handle ships 750 feet or bigger, and they're not building any new ones," Andrew Panzo, general partner at NewSpring Capital in Radnor, told me. NewSpring bought 42% of Northeast Ship Repair, which has leased Dry Dock No. 2 at the Philadelphia yard, and a second dock in Boston, from J.H. Lehman Co., the New York investment firm headed by Reagan-era U.S. Secretary of the Navy John Lehman, a Philadelphia native. Plexus Capital, Raleigh, N.C., bought another 42 percent. Northeast President Ed Snyder and other managers and private investors bought the rest.

Under the federal Jones Act, Navy vessels have to be repaired and repainted regularly at U.S. facilities, Ponzo told me. Northeast's Philadelphia Ship Repair unit is removing engines, propellers and other key equipment from aging guided-missile frigates and other decommissioned ships, after which they will be scrapped.

The firm employs about 100 union tradesmen at its Philadelphia dock. NewSpring backs a mix of software, business services and manufacturing firms. "We believe this is a very good investment for our mezzanine (mid-level) fund," Panzo added. "We have a captive audience in the U.S. Government. We plan on working with management to build out the commercial side further. This is not a business where there will be a ton of growth. You can only bring one ship into a drydock at a time."