Friday, January 21, 2000

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

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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