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Tidewater announces
$300 million newbuild program
Tidewater Inc. (NYSE: TDW) announced yesterday that it is preparing
to embark on a "modest "newbuilding program, estimated
to cost in the range of $300 million.
The program is not ,apparently, focused
on replacement of units in the company's present aging fleet.
William C. O'Malley, Tidewater's chairman,
president and chief executive officer, stated that the new-build
initiative will be "directed to the highest end of the market
and would include very large Anchor Handling Towing Supply vessels
and large Platform Supply vessels capable of working anywhere
in the world."
Continuing, O'Malley said: "These
new vessels will be designed to cover operational capabilities
the company does not presently possess. They are being built
so that Tidewater can meet and service all the needs of its
customers."
Tidewater expects to fund this program
from its current cash balances which exceed $150 million, its
projected cash flow and its existing $200 million line of credit.
Currently, the company is debt-free.
"We believe the timing of this program
is advantageous in that we anticipate that shipyard prices, delivery
schedules and the quality of craftsmanship will be better than
what we have witnessed over the past few years," O'Malley
said, adding: "Deliveries on these new vessels are expected
to commence in about two years, and I am confident that these
new vessels will, upon their completion, service the needs of
our customers which we currently are unable to fulfill."
Tidewater owns and operates approximately
625 support vessels, the world's largest fleet serving the international
energy industry.
Kværner
makes an another provision for shipbuilding losses
Kvaerner intends to make a NOK
750 million (about $94 million) provision in its year-end accounts,
mainly related to the disposal of its shipbuilding activities.
The provision is additional to the NOK 2 billion provision to
cover the exit from shipbuilding, made when the Group announced
its comprehensive restructuring plan last April.
The group has now disposed of most of its
other non-core activities, on time and within the agreed budgets.
The sale of the shipbuilding activities, however, is still ongoing.
Five shipyards have been sold, and the group says it is in "an
advanced stage of negotiations for other yards."
The yards not yet sold include Masa-Yards
in Finland, Warnow in Germany, and the Philadelphia yard in the
USA.
Based on a current overall assessment,
the Group finds it prudent to provide an additional NOK 750 million
to cover possible losses related to the disposal of the remaining
yards, primarily Masa-Yards and Warnow, and certain other non-core
disposals yet to be completed.
The sale of Masa-Yards has been delayed
due to the group not having accepted the offers so far received
from interested buyers. However, negotiations are continuing.
While Masa-Yards has a strong order reserve
and a good market position, it has experienced cost overruns
on recent projects, and requires restructuring to improve its
operational performance and to regain profitability. Kvaerner,
therefore, intends to include a provision in its 1999 accounts
to allow for this situation and has started the implementation
of an improvement program.
The intention is still to sell the yards,
but only when acceptable terms can be achieved.
Kvaerner Warnow in Germany suffers from
both capacity restrictions imposed on the yard by the EU, and
weak market conditions. As long as the capacity limitations remain,
the yard has a handicap in achieving the efficiency required
to compete profitably with Asian yards. A provision is therefore
appropriate at this yard also, says Kvaerner.
Kvaerner also announced that a settlement
of claims has been reached following completion of the Triton
floating, production, storage and offloading vessel, eliminating
cost uncertainties previously attached to this project. The resulting
loss on the project will be absorbed in provisions made in the
1999 accounts.
The 1999 preliminary results for the Kvaerner
Group will be published on Tuesday 22 February.
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