The 120-foot cargo ship Kwai sits at the R.M. Packer Co. bulkhead in Vineyard Haven. From the outside she looks like a troubled hulk, but inside she is aglow with change. The 55-year-old ship that once traveled the waters of Europe, first as herring fishing boat and later as a freighter, is being converted to a sailing ship.

Brad Ives, 56, of Oak Bluffs is her captain and he sees her becoming a world class sailing ship, powered more by the winds than by her rebuilt General Motors 1271 diesel engine. This is not an idle plan. Mr. Ives has already put $350,000 into her in metal, fittings and sweat equity. He has a four-man crew working daily on her. And while the changes are more below deck, the work is deliberate and dramatic.

On a recent sunny day with the temperature in the eighties, welder Garret Talbot was installing hawse pipes in the chain locker. Like all sailing vessels, Kwai will soon have two fishermen-style anchors with enough chain to anchor in most harbors around the world.

Mr. Ives buys and sells tropical lumber for a living. He acquires some of the most exotic woods of South America for boat builders up along the Atlantic and Pacific seaboard. Nat Benjamin and Ross Gannon have used Mr. Ives's wood for their vessels since 1983.

Mr. Ives calls himself a green buyer. The wood he purchases comes from environmentally friendly sources. He started his business, Deep Water Ventures, in 1978.

Kwai is a dream that he and his wife, April, have been working on for more than three years.

When the boat leaves the Vineyard this October she goes to the Pacific, where the rest of her work, including rigging for sailing, will likely take place. She has resided on the Vineyard for a year and a half - but that is only part of the story about a ship that was once left for scrap metal and then given another chance.

Mr. Ives discovered Kwai when he was out looking for a freighter for Ralph M. Packer of Vineyard Haven. For Mr. Packer, Mr. Ives found Equuleus, a 110-foot cargo ship built in 1956 in Denmark and still in good shape. "We charter her to go back and forth between here and Suriname. She carries tropical wood, harvested in a sustainable manner from the rain forest," Mr. Ives said.

Kwai was a different story.

She sat as a rusting hulk in a fjord in Bergen, Norway. A serious fire in her stern cabin and engine room had ended her days as a general cargo freighter.

"She had essentially been abandoned when we got her. I knew her last work was as a sand and asphalt carrier among the fjords of Norway," Mr. Ives said.

After accomplishing his goal for Mr. Packer, Mr. Ives could not forget Kwai rusting away, in sad shape. He purchased her in May 2002 for $15,000.

In gathering information about the vessel, he met the previous owner and learned her tale.

Kwai had the hull of a sailing ship. She was built in Bremen, Germany in 1950 as a herring fishing boat. Fishing boats of that time were designed and built to closely match the hulls of earlier sailing ships.

Mr. Ives said he marvels at the shape of the hull and how well suited she is for being powered by the wind. "Fishing vessels were built to be comfortable out at sea," he said. "Cargo ships are designed to carry lots of cargo and aren't suited for sail. What we have here is a hull that can be sailed."

As the herring fishery collapsed in the North Sea, in 1963, Kwai was sold to a Norwegian firm and converted to a cargo ship.

Mr. Ives has refurbished two sailing vessels. From 1969 to 1978 he converted and created Sofia, a 90-foot schooner. From 1978 to 1987 he created a 100-foot ketch named Edna.

For the first step of Kwai's rebirth, Mr. Ives said, "She was four months in Norway where she was repowered."

It was a long tough struggle just to get the soot and charred remains out of the engine room and cabin. She was hauled out for a year and a half in Portugal. "Her hull was sandblasted. We rebuilt the engine room. We worked on her and got funding," he said.

She spent last winter in Oak Bluffs harbor, and this spring and summer at Packer Wharf.

The crew works hard on her daily. On this day, powered hammers remove paint chips. The large cargo bay below deck was recently repainted. Mr. Ives said his crew are also investors. Just as whalemen worked for lays on the ships they served 100 years ago, Mr. Ives has worked out agreements with all those who are invested in the ship's success. "The financing is the same as a whaling ship. In those days the merchants put forward the money," he said.

Kwai will work hard. She'll carry cargo as a sailing ship and she'll have paying passengers. And from this dual purpose she will make money for her owners.

"Crew members get $100 cash and $100 in equity per week," he said. Two more crewmen will be hired soon. For now Mr. Ives is the captain, but another will be hired to run her when she leaves.

Andy (JoJo) Brittain, 30, is the ship's engineer. He is the longest standing crew member aboard and joined in May of 2002. Given the positive experience, Mr. Brittain now has dreams of someday restoring his own ship. A highlight of his time on the Kwai was crossing the Atlantic Ocean in June 2004. It was an amazing voyage for him. A ship performs so differently when it is on the high seas, compared to being tied up at the dock, he said.

"I like going to sea," Mr. Brittain said. "All the problems of the world disappear, and all you have is the ship and the people aboard."

Kwai will begin making money for her restoration later this year. "We want to leave here in October. We are going to Hawaii," Mr. Ives said. From Hawaii, they will run cargo back and forth to the Cook Islands. The money that will be raised by the ship will be reinvested to continue with the ship's conversion.

Mr. Ives said it will probably take another $400,000 to make her the sailing ship he envisions. "I have no doubt in my mind of her capacity to operate at a profit," he said.

For Mr. Ives this project has taken on a life of its own. "It is not me doing this. It is the whole ship. It is everyone that is involved in this project that makes it all happen," Mr. Ives said.