HALIFAX (AP) _ The owner of a U.S.-owned ship boarded by Canadian soldiers says the seizure occurred two hours after an agreement had been reached to end a drama involving military equipment being held at sea.

``While the lawyers were finalizing the last agreement to be signed, the troops were boarding the ship,'' said Peter Margan of Third Ocean Marine Navigation, owner of the seized cargo ship GTS Katie.

Margan said a verbal agreement to end the impasse over payment for transporting $150 million worth of military hardware was reached with the Canadian government Thursday morning, hours before soldiers dropped from a helicopter to seize control of the Katie off Newfoundland.

A spokesman for Defense Minister Art Eggleton denied late Friday that any deal was reached before the ship was boarded.

``There cannot be a verbal agreement,'' Alastair Mullin said from Ottawa. ``We were looking for an offer in writing.

``For three weeks we had asked them for an offer in writing and no one had been able to deliver.''

The Katie had been anchored in international waters off Newfoundland since last month because of a contract dispute between its owner and charterer.

Third Ocean was hired by a Montreal-based company, Andromeda, which had in turn been contracted by the military to bring back the military supplies used by Canadian peacekeepers in Kosovo, a province of Serbia.

Third Ocean, based in Annapolis, Md., says Andromeda owes them about $294,000 for carrying five tanks, 200 of Canada's 2,000 armored vehicles, and 390 crates packed with munitions. Three Canadian soldiers are also on board to guard the cargo.

Two Canadian warships were escorting the container ship to Becancour, Quebec in Canada, expected to arrive Sunday.

The defense ministry said the two companies will have to iron out their differences in court.