December 9, 2008
Davie Yards to get $10 million capital injection
Levis, Quebec, shipbuilder Davie Yards Inc.(TSX:DAV) today reported that it has signed a letter of intent with a new company (Newco), established by Bergen Group (OSL:BERG) and Davie's client, Cecon ASA (Cecon).
The plan is for Newco to invest US$10 million in Davie by way of an equity investment.
In addition, Bergen Group will enter into a management agreement with Davie. Bergen says that under the agreement it will provide Davie with knowledge and advice related to operation supervision, project management and change processes.The aim, says Bergen, is to assist Davie in securing delivery of the existing order backlog and also to contribute to develop the yard for the future.
Bergen will control 51% of the voting shares in Newco. Newco intends to invest US$ 10 million in Davie in common shares at a subscription price of CDN$ 0.10 per share in order to become an industrial partner with Davie and to secure cooperation between Bergen and Davie. Newco's investment of US$ 10 million is subject to Davie securing refund guarantees for the vessels under construction.
Davie intends, subject to market conditions, to offer its existing shareholders the opportunity to subscribe for additional common shares on the same terms by way of a rights offering which will be launched upon completion of the restructuring initiatives.
Davie says the investment will be another vital part of the Company's financial restructuring plan and will, together with the earlier agreed price increases with its clients and the financial support from Investissement Quebec, provide most of Davie's capital requirements.
Davie says that Bergen will be offered a seat on the Board of Directors of Davie, and Board member Anne Stottum Stenseth will resign to accommodate this.
"We are pleased with the assistance offered from the Bergen Group. Bergen can contribute with leading shipbuilding and offshore vessel expertise and know-how and can bring Davie closer to the international shipbuilding and offshore oil environment", said Steinar Kulen, the CEO of Davie.
"The Canadian government has clearly stated that they are backing the shipbuilding industry in
Canada," says Bergen Group CEO Pal Engebretson. "We would like to assist in developing Davie for the future, enabling the Yard to serve the Canadian oil & Gas industry, the Canadian Naval Fleet and the offshore shipping industry."
Engebretsen continues: "The future represents significant offshore opportunities in Canada and in the Artic area. The cooperation agreement with Davie represents a modest risk for us with only a minor capital investment, but with an interesting upside. The agreement will increase earning per share and cashflow per share for Bergen Group from 2009 and onwards. In addition we see a long term potential in Canada beyond 2010."