Legislation permits guarantees for up to 87 ½ percent of the Actual Cost of certain classes of vessels
Actual Costs are those determined to be fair and reasonable by the Maritime Administration.
Actual Costs include those items which would normally be capitalized as vessel costs under U.S. generally accepted accounting principles, such as the cost of construction, reconstruction, or reconditioning (including designing, inspection, outfitting and equipping) of the vessel, together with construction period interest and the Guarantee Fee.
Technology costs generally includes those items which would normally be capitalized as shipbuilding technology under U.S. generally accepted accounting principles including construction period interest and the guarantee fee but excludes amounts payable to the manufacturer for early delivery of equipment and pre-delivery expenses which may not be properly capitalized as the cost of the Technology.
However, some capitalizable expenses are excluded from Actual Cost such as legal and accounting fees, printing costs, vessel insurance and underwriting fees, and any interest on borrowings for the shipowner’s equity in the vessels or shipyard’s equity in the Technology.
If a Title XI guarantee of obligations is documented after delivery of the underlying vessel or technology, or is a refinancing, Actual Costs will be reduced for depreciation from the date of delivery to the documentation date of the guarantee.