May 12, 2009
Davie Yards back at work
Davie Yards Inc. (TSX:DAV), Levis, Quebec, is back in operation. CEO Steinar Kulen today said: "We have 1,000 employees back at work and require another 500 to complete our current orders."
Davie has been able to resume work because customer Cecon ASA has resumed payments to Davie as the pieces of a financial restructuring plan start to fall into place.
Davie Yards has five vessels on its orderbook: three offshore construction vessels for Cecon and two multipurpose accommodation vessels for Ocean Hotels Ltd. But on December 11, 2008, it announced that it was laying off its 1,100 shipyard workers until it had completed key steps in a financial restructuring plan
Today, Davie said that it has closed the second and final tranche of a previously announced US$20 million private placement of common shares. Cecon received a total of 80,567,580 common shares at a price of CDN$0.10 per share for an aggregate consideration of approximately US$6.6 million. The shares will be subject to a hold period of 4 months after the closing date.
Other elements of the restructuring have included loans from Investissement Quebec in the aggregate amount of CDN $12.7 million and amendments to existing construction contracts with Davie's clients for an aggregate price increases of US$95 million.
In addition, Davie has, together with Export Development Canada ("EDC"), rearranged part of the US$300 million loan and guarantee scheme provided to Davie by the Government of Canada in December 2008, and from this scheme Davie's client, Cecon has entered into a loan agreement for a US$200 million senior secured loan. EDC has funded the first advance to Cecon under this loan and Cecon has resumed payment of its instalments to Davie.
"I am pleased we are close to finalizing our financial restructuring," said Mr. Kulen, who added that completion of the restructuring plan will also require the funding of a $100 million EDC facility to customer Ocean Hotels Plc. and the renegotiation of the Investissement Quebec loan facilities to pre-fund tax credits and employment obligations.
"We are presently working on those issues," he said.