New pressure for Davie Yards to come out of bankruptcy

Bankrupt Quebec shipbuilder Davie Yards has gotten another order from the Québec Superior Court extending the stay of proceedings against it under Canada’s Companies’ Creditors Arrangement Act (“CCAA”) until March 10, 2011.

Davie says that it “still requires additional clarifications in respect of the proposals it received from four potential investor groups prior to moving forward on an exclusive basis with one of them. The new extension will also allow Davie to continue working on a response to the request for proposal to become one of the two selected shipyards under the National Shipbuilding Procurement Strategy (NSPS) and to develop and eventually submit a plan of arrangement to its creditors under CCAA.”

Davie was one of the shipbuilders to receive a February 7 RFP to build the large vessels required under the shipbuilding strategy. Davie Yards was among shipbuilders to receive the RFP, along with Irving Shipbuilding Inc., Saint John, N.B., Vancouver Shipyards Co. Ltd., North Vancouver, B.C., Kiewit Offshore Services – a division of Peter Kiewit Infrastructure Co., Milton, Ontario and Seaway Marine & Industrial Inc., St. Catharines, Ontario.

If Davie wants to its response to the RFP to be considered, it will have to emerge from CCAA protection.

The Globe and Mail reports that earlier this week, Canada’s Public Works Department issued an amendment to the RFP that says it is mandatory that all bidders are solvent, meaning a company must be able to cover all its debts.

“The deadline to submit bids is early July,” reports the Globe and Mail. “This means Davie, which has been under court protection for close to a year, must get its affairs in order within months or be barred from bidding.”

A syndicated Canadian Press story by Murray Brewster says that Davie made lobbying efforts to get the restriction lifted,

“Being solvent is a boilerplate requirement for anyone doing business with the federal government and was supposed to be part of the request for proposal issued Feb. 7, when Public Works Canada asked the country’s major shipyards to come forward with their plans,” the story says. It notes that sections of the proposal dealing with financial requirements were intentionally left blank by federal officials “as the back-room arm-twisting continued.” The federal government rejected Davie’s pleas and was re-issued on Feb. 14 with the financial stipulations.

[important color=red title=Large Ship  Projects for Department of National Defence] Arctic/Offshore Patrol Ships: The Arctic/Offshore Patrol Ships will be acquired to conduct armed sea-borne surveillance in Canada’s waters, including in the Arctic. They will enhance the government’s ability to assert Canadian sovereignty and provide surveillance and support to other government departments. Their build timeframe is planned for 2012-2019.

Joint Support Ships: The Joint Support Ships (JSS) are a critical component for achieving success in both international and domestic Canadian Forces (CF) missions, as laid out in the Canada First Defence Strategy. They constitute a vital and strategic national asset. The presence of a JSS will increase the range and endurance of a Naval Task Group, permitting it to remain at sea for significant periods of time without going alongside for replenishment. The Joint Support Ships will replace the two existing Protecteur Class Auxiliary Oiler Replenishment (AOR) vessels.

Canadian Surface Combatants: These warships will replace Canada’s destroyers and frigates. While all these vessels will be based on a common hull design, the frigate and destroyer variants will be fitted with different weapons, communications, surveillance and other systems. These new ships will ensure that the military can continue to monitor and defend Canadian waters and make significant contributions to international naval operations. This project is in the options analysis phase and will proceed to Government for approval to enter the Definition phase in due course.[/important]

[important color=blue title=Large Ship Projects for Fisheries and Oceans, CCG] Offshore Oceanographic Science Vessel (OOSV): The OOSV project will acquire a replacement vessel for the Canadian Coast Guard’s largest science vessel — CCGS Hudson. This vessel was built in 1963 and its replacement is critical to fulfillment of the Department’s science mandate as well as mandates of other government departments and agencies. The vessel currently operates on the East Coast of Canada. The construction timeframe is planned for 2011-2013.

Offshore Fisheries Science Vessels (OFSV): The OFSV project will acquire three (3) vessels for the Canadian Coast Guard (CCG) Fleet. The OFSV will replace four (4) ageing Coast Guard ships on the East and West Coasts of Canada that provide a platform from which critical scientific research and ecosystem-based management can be performed. Their build timeframe is planned for 2011-2014.

Polar Icebreaker: The Polar Icebreaker is one of the centerpieces of the Government of Canada’s Northern Strategy, which focuses on strengthening Canada’s Arctic sovereignty, Northern economic and social development, and protecting the North’s environmental heritage. The Polar Icebreaker will be a Government of Canada asset. It will support the work of several departments and agencies, deliver the full range of Coast Guard programs and establish a strong federal presence in the Arctic. This vessel will provide an enhanced capability to operate further north and for a longer period each year than is currently the case. The construction timeframe is planned for 2013-2017.[/important]

February 18, 2011