September 22, 2008
Davie Yards gets $40 million price increase for OCV's
Lévis, Quebec, based Davie Yards Inc. (TSX: DAV) said yesterday that its largest client, Cecon ASA has agreed to a total price increase of US$40 million for the three offshore construction vessels it has on order on order at the yard.
The parties have also agreed on a revised delivery schedule for the three vessels. The new delivery dates will be: August 2009, November 2009 and April 2010.
Davie, which announced September 19 that it had hired Pareto Securities to advise it on its "strategic alternatives," says the agreement forms an important part of its financial restructuring initiatives. The price increase will allow it to reverse the loss provision taken in respect of the Cecon contracts.
The agreement is subject to Cecon receiving refund guarantees from Export Development Canada or similar creditworthy parties and Davie raising no less than US$30 million in equity and/or debt financing.
It is anticipated that a significant part of the new equity will be provided by a strategic investor. The agreement with Cecon is also subject to Davie reaching a similar agreement with its other significant customer, Ocean Hotels Plc. Davie says that agreement is presently being negotiated.
"We have reached a significant milestone on our way to a successful restructuring of the yard" said Steinar Kulen, the CEO of Davie, "I feel confident that we will be able to secure the long-term financial solution required to support the future for our yard and our 1,100 employees."