May 21, 2003
Kvaerner Masa-Yards secures massive export financing commitment
Finnvera is owned by the Finnish state. It describes itself as a specialized financing company offering financing services to promote the domestic operations of Finnish businesses and to futher exports and internationalization of enterprises.
Aker Kvaerner says that with this financing solution for the Finnish yards, it will be able to redirect a substantial part of its financial resources to develop the other parts of the group.
Through this frame agreement, Finnvera will grant Masa-Yards guarantees that will help the company to conduct negotiations for new orders on the highly competitive international shipbuilding market.
"With the consent of the Cabinet Committee on Economic Policy," Finnvera says it was able to "agree on exceptionally extensive guarantee arrangements in view of Finnvera's operating capacity."
The commitments associated with these arrangements will come into effect if the Finnish shipyard secures new shipbuilding orders. The maximum sum of the guarantees to be granted by Finnvera will depend on the value of the future orders. The total value of the commitments included in the pre-delivery guarantee scheme needed for shipbuilding may rise to nearly 1,000 million euros. Guarantees will be granted separately for each individual project.
The total value of post-delivery financing, i.e. Finnvera's Buyer Credit Guarantees, will depend on the value of the forthcoming orders and on the need of the potential buyers to acquire ECA (Export Credit Agency) backed financing. Buyer Credit Guarantees will cover risks arising from the shipping companies having placed orders for ships. In all, it is estimated that the value of the commitments pertaining to Buyer Credit Guarantees may rise to nearly 1,500 million euros.
Finnvera's export credit guarantee operations are based on Finnish export credit guarantees legislation that has been subject to the appropriate notification procedure within the European Union. Any guarantees coming under the scope of this arrangement will be granted on commercial grounds. The guarantees granted by Finnvera will not include any aid elements, says Finnvera.
Aker Kvaerners says that the agreement means that Kvaerner Masa-Yards and its future shipbuilding projects will be granted guarantees and bonding lines by Finnvera at commercial terms sufficient to meet the needs of foreseeable business volume of Kvaerner Masa-Yards during the coming years. Kvaerner Masa-Yards will of course continue to seek financing from other sources. The agreement expires at the end of 2010.
Aker Kvaerner will retain its ownership in Kvaerner Masa-Yards. The group will continue to have above EUR 200 million in equity in the Finnish shipbuilders, an investment that is expected to generate a "reasonable" rate of return going forward.