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Marine Log

December 18, 2007

Aker Yards Finnish ferry projects face more delays

With problems with its Finnish yards' ferry deliveries impacting its financial results, Aker Yards is contemplating spinning off its offshore and specialized vessels business to enhance shareholder values.

Aker Yards reports that the delivery program for ferries from its Finnish yards has again had to be revised. Several projects will be delivered "some weeks or months" later than planned.

Aker Yards attributes the delays to "the continued very heated situation in the shipbuilding industry, and continued high loading in the Finnish operations."

It says its results for 2007 and 2008 will be impacted.

The Board of Directors has also decided to evaluate a possible spin-off of the Offshore & Specialized Vessels business area in order to enhance shareholder values.

"The Finnish operations of Aker Yards have taken losses in 4Q on its order book by NOK 400 million, lowering the expected result for Aker Yards in 2007 to approximately NOK 500 million EBITDA," says the company. "The net profit is estimated at about NOK 350 million. The losses in Finland will have a diluting effect on margins in 2008. The margin level on cruise vessels in Finland has also been revised downwards. The combined effect gives an estimated EBITDA margin for the Group for 2008 at around 4 percent."

Aker Yards says a very high level of growth in activity level at the same time as the market is booming has lead to a lack of resources giving a knock-on effect on the total backlog in Finland. Thus the deliveries had to be adjusted to a more significant degree than previously anticipated. Towards summer 2008 loading will gradually be coming down.

The Board of Directors will evaluate several alternatives for the possible spin-off of the Offshore & Specialized Vessels business, including spinning it off to existing shareholders, by a separate stock listing, or "other alternatives that will be attractive to all shareholders."