FILE - In this Sept. 6, 2013 file photo, the yacht Sequoia motors on the Anacostia River in Washington. A Delaware judge is holding a hearing Wednesday, May 11, 2016, to determine a price at which a lender can exercise an option to purchase the former presidential yacht Sequoia or cede possession to its current owners. (AP Photo/Alex Brandon, File)

GEORGETOWN, Del. - In its glory days, the yacht Sequoia was a spit-polished, floating mini-palace, on which presidents from Herbert Hoover to Jimmy Carter entertained dignitaries and diplomats, or simply sought refuge from the Oval Office and the glare of the international spotlight.

In more recent years, the privately owned, 104-foot wooden vessel, which Carter had sold in 1977, has been used for entertaining and sightseeing tours of the Potomac River, offering four-hour charters for $10,000 (plus food and drink) from its dock at a Washington, D.C., marina.

Now, the National Historic Landmark, built in 1925, lies rotting under a layer of shrink wrap in a Virginia shipyard as attorneys argue over who should pay to repair it, how much it will cost, and who will ultimately own the vessel.

"It's not a pretty sight," Earl McMillen III, founder of Rhode Island-based McMillen Yachts Inc., told a Delaware judge Wednesday.

McMillen's testimony came in a hearing ordered by Vice Chancellor Sam Glasscock III to help him determine a price at which a lender can decide to exercise an option to purchase the Sequoia or cede possession to its current owners.

The ship has lain in dry-dock on a railway at Chesapeake Boat Works in Deltaville, Virginia, since late 2014, as attorneys for FE Partners LCC and the Sequoia Presidential Yacht Group LLC argue over its fate.

"It is unfortunate that she has had to suffer for the last year and half," McMillen said.

In 2012, the Sequoia group, led by Washington lawyer and businessman Gary Silversmith, entered into a $7.5 million loan agreement with FE Partners, an investment entity formed by Washington, D.C.-based Equator Capital Group and members of the Timblo family of India, which has interests in the mining and hospitality industries.

Under default terms of the loan agreement, FE Partners can exercise an option to purchase the yacht for $7.8 million.

Sequoia filed a lawsuit in 2013 seeking to prevent FE Partners from exercising its purchase option, but it later agreed to a default judgment in favour of FE, which alleged that it was fraudulently induced and that Sequoia had breached the loan agreement.

FE Partners has declined to exercise its option, however, as attorneys argued over how much the option price should be reduced because of needed repairs, liens and other outstanding liabilities. FE says it is already owed more than $3.8 million in loan repayments and legal expenses.

McMillen, meanwhile, has estimated that it will cost about $4 million to get the yacht into good condition and working order, as required under the loan agreement.

"I think you'd be hard-pressed to find anything worth saving in her hull structure," he said Wednesday, citing rotten and broken framing, floor timbers and planking.

In addition to replacing the entire hull, McMillen, testifying for FE Partners, said the boat's electrical and plumbing systems also need significant upgrades and repairs. He noted that the Sequoia does not even have a depth sounder.

"I wouldn't operate a boat in the Potomac without one," he said.

McMillen's repair estimate includes almost half a million dollars to move the boat from its current location to his shipyard in Rhode Island for repairs.

"It's not cheap, ... but when you consider the value of the boat, the potential value of the boat, and her history, you don't want to take any chances," said McMillen, adding that he doesn't believe the necessary "talent," including shipwrights experienced with wooden boats, can be found in the Chesapeake Bay region.

Silversmith claims FE Partners is grossly overestimating the cost of needed repairs as part of a trial strategy to drive up the purported liabilities in order to acquire the Sequoia for little or nothing out of pocket.

"It definitely needs work, but it doesn't need to be rebuilt," he said during a break in Wednesday's hearing.

The Sequoia ownership group contends that it will cost only about $310,000, as estimated by Chesapeake Boat Works, to address problems outlined in Coast Guard inspections and to get the Sequoia floating again.

Following a daylong hearing, Glasscock, who has taken a keen interest in the case while also expressing frustration at the long-running legal battle, told attorneys he is considering hiring his own independent marine surveyor to determine what repairs are needed.

News from © The Associated Press, 2016