February 25, 2010
Davie Yards files for protection from creditors
Canadian shipbuilder Davie Yards (TSX:DAV) announced today that it has filed for protection from creditors under the Companies' Creditors Arrangement Act ("CCAA") with the Quebec Superior Court. The CCAA is broadly similar to U.S. Chapter 11 bankruptcy.
The Davie Board of Directors said it was making the move to allow the company to work on a new plan to secure additional financing and complete its projects currently under contract.
In conjunction with the CCAA filing, Davie says it is "implementing a temporary realignment of its operations designed to preserve its working capital while working on securing new financing. Davie will continue its shipbuilding activities with a reduced workforce of approximately 160 employees. Approximately 1,590 employees will be laid off, most of them temporarily, starting Monday March 1st."
Davie says that accumulated losses due to currency fluctuations and project cost increases related to delays of payment of installments by clients have affected the corporation's results of operations.
"Following a comprehensive review which was undertaken when Davie recently embarked on the most complex aspects of construction," says a company statement, "the corporation concluded that the learning process involved in building offshore vessels is more challenging than anticipated and has resulted in additional delivery delays and costs for the ships currently under construction. Davie has already begun to implement corrective actions in its operations and will concentrate its activities in order to be able to focus on implementing a financing plan while minimizing the impact on its clients."
"This is a very unfortunate situation but we must realign our operations in order to get the time necessary to move forward on solid footing", said the new CEO of Davie, Mr. Gustav Johan Nydal, who started in the job just last week. He continued, "we hope that we will soon be able to bring our valuable workforce back to work. We are committed to deliver the ships we have on order and we appreciate the support of our partners through this transition period."
Davie also announced that Mr. Donald Campbell is taking over as Chairman of the Board. Mr. Campbell is a senior strategy advisor with the law firm Davis LLP. Prior to joining Davis, he was Executive Vice President of CAE. Mr. Campbell previously enjoyed a distinguished career with Canada's Department of Foreign Affairs and International Trade, serving most recently as Deputy Minister of Foreign Trade and as the Prime Minister's Personal Representative for G-8 Summits (1997Ð2000). In addition, Mr. Campbell has served as Canada's Ambassador to Japan and Korea.
Mr. Steinar Kulen has decided for personal reasons not to take over as Chairman of the Board but will remain a director.
The Toronto exchange said today that it is reviewing the common shares of Davie Yards Inc. with respect to meeting the requirements for continued listing pursuant to the Expedited Review Process. It added: "The Common Shares are suspended from trading immediately."