Thursday, April 6, 2000

LNG carrier order
Norway's Bergesen DY ASA has now reached a final agreement with Korea's Daewoo Heavy Industries for construction of a 138,000 cubcic meter membrane type LNG carrier. In a preliminary agreement announced on March 24, Bergesen the vessel will be delivered in the first quarter of 2003, with final contract price is expected to be about $150 million.

Bergesen will have option to order one additional LNG-carrier for delivery in the second half of 2003.

Kvaerner pulls out of Masa-Yards sale
Kvaerner Group today announced that it will not conclude an agreement to sell its Finnish shipyard, Kvaerner Masa-Yards at this time. "Negotiations have not led to a satisfactory agreement being achieved," said a Kvaerner statement. "As a consequence, Kvaerner will now concentrate on the implementation of an improvement program at the yard with the objective of achieving good results from the very substantial current order reserve, amounting to some $2.6 billion.

Commenting on today's announcement, president & CEO Kjell E Almskogsaid: "We have decided to call off the sales efforts for now, and instead to concentrate our efforts on performance improvement at the yard. It has become apparent that there is scope for significant improvements in the operations of Masa-Yards, which will result in a stronger business, improved profitability and a higher value in the long run."

The Kvaerner statement says that "Martin Saarikangas (63) has expressed his desire to retire from his present role as Chief Executive of Masa-Yards as soon as a new CEO is in place. He will thereafter continue his long-term association with the yard from a position on the Board of Directors of Kvaerner Masa-Yards. In addition to a new CEO, the search for a new CFO is ongoing."

Skaarikangas led a Finnish group that tried to put together a consortium to buy the yard. Yesterday , Finnish press reports said that group had dropped its bid because of Carnival Corporation's failure to participate. In today's statement, Kvaerner says that "discussions with Royal Caribbean Cruise Lines and Carnival Cruise Lines about their participation in a buying group did not lead to an agreement."

Commenting on Kvaerner's decision, Micky Arison, Chairman of Carnival Corporation, said: "Carnival supports Kvaerner's decision to retain the yard for the time being and to implement a range of improvements at Masa-Yards. As one of our key suppliers, with four ships for our Group currently under construction, Masa-Yards will continue to play and important role in our growth strategy."

In a separate statement, Richard Fain, Chairman & CEO of Royal Caribbean Cruise Lines, said: "We have been and will continue to be beneficiaries of Masa-Yards' outstanding shipbuilding capabilities, evidenced most recently by the completion of the Voyager of the Seas. We expect to continue our long-standing co-operation with Masa-Yards."

The order reserve for Kvaerner Masa-Yards includes the fourth and fifth vessels in the Eagle-class series for Royal Caribbean Cruise Lines, for which al etter of Intent was signed in February.

Kvaerner says it will secure the working capital requirements of Masa-Yards through off balance sheet third party financing. In this way the ownership of Masa-Yards is not likely to materially affect Kvaerner's current program for debt reduction. The Group's aim, as announced in the 1999 restructuring plan, to reduce debt by at least $1 billion, remains in place.

Kvaerner says the decision to call off the present sales efforts does not imply that the group has departed from its long-term strategic objective of making a complete exit from shipbuilding. "We have repeatedly said that we would not sell unless we could achieve terms that reflected the underlying value of the yard. For the time being it is not possible to conclude a deal that would be in the best interest of our shareholders. Once the performance of the yard has been restored, we believe this will change," said Almskog.




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