Cecon ASA says it’s nearer to getting Davie newbuilds completed

Subsea installation contractor Cecon ASA may at last be nearer the day when it actually gets to take delivery of the three vessels it has on order at Quebec shipbuilder Davie. It has gotten an acceptance from Export Development Canada to acquire the rights in a $200 million EDC financing originally received by Cecon ASA in February 2009.

Cecon says it will now proceed to negotiate a final purchase and sale agreement whereby EDC will sell its rights in the $200 million loan agreement to Cecon for an agreed cash settlement. The closing of the transaction is conditional upon Cecon ASA reaching a final commercial contract with the Davie Yard Joint Venture formed by Upper Lakes Group and SNC Lavalin, to complete the three vessels currently under construction at Davie Yard. The closing and settlement of the transaction is expected to take a few weeks.

Cecon ASA says the acceptance and solution from EDC enables to complete the construction of the three vessels at the Lévis, Quebec, shipyard

The revised cost to complete the three vessels, including the EDC cash settlement, will be in the range $250-270 million. The contract with Davie Yard is a fixed price turn-key contract with payment upon Cecon ASA’s satisfactory delivery of the vessels from Davie Yard. Cecon says it has been working with an international bank that will deliver sufficient financing and payment guarantees in order to enter into a binding and final contract with the shipyard.

Cecon ASA’s Chief Executive Officer, Terje Tellefsen, said in a comment: “We are delighted to have reached an agreement with EDC and we are now looking forward to complete the project and take delivery of the three state of the art subsea construction vessels. The delivery of the vessels will strengthen Cecon as a global provider of subsea services including pipelaying and similar subsea work.”

April 24, 2012