Kværner accepts YUKOS-led rescue plan

Norwegian contractor Kværner ASA has agreed to a proposed solution for its financial difficulties. The solution involves financing through Russian company YUKOS and a group of Norwegian and international banks.

Oct. 30, 2001

3 min read

By the OGJ Online Staff

HOUSTON, Oct. 30 -- Norwegian contractor Kværner ASA has agreed to a proposed solution for its financial difficulties.

The solution involves financing through Russian company YUKOS Oil Co. and a group of Norwegian and international banks. An underwriting consortium for 3 billion kroner ($340 million) has been formed to implement a rights offering.

Kværner has also entered into a deal with the lenders to propose a conversion of approximately 4.5 billion kroner in debt to a subordinate convertible note. The deal presumes existing loans will be rescheduled to the end of 2004.

"This is a solution that mirrors the efforts of many parties who have genuinely wanted to find a long-term solution for Kværner," said Harald Arnkvaern, chairman of Kværner. "Important shareholders, led by Yukos, have contributed to this solution which gives us the opportunity to move forward, develop the company -- and demonstrate to the world that Kværner, with its 35,000 employees and unique qualities, is a viable going concern. The foundations that have now been established should also make it attractive for investors to participate in the rights offering," he concluded.

The plan is dependent on acceptance by all lenders. Also, shareholders are set to approve the 3 billion kroner rights issue by the end of November.

"This solution will remove the uncertainty that has made it difficult for the group to access all of its available cash in various subsidiaries," said Kværner.

The company will reduce the cost of financial advisors and establish a working group to reduce outstanding claims. Also, Kjell E. Almskog, president and CEO, has waived his right to 2 years' salary upon his departure.

Kværner said it considered "concrete proposals" from rival contractor Aker Maritime AS, but that the proposals implied a considerable write-off of loans that lenders were not willing to accept.

Russian company YUKOS proposed this rescue plan Monday.

Last week, YUKOS increased its stake in Kværner to 12% and bid to increase it to 25% (OGJ Online, Oct. 22, 2001).

YUKOS' proposal to Kværner would provide the company with working capital for the next week, pending completion of negotiations for the restructuring of debt and establishing a guarantee consortium for an equity rights issue. The capital would represent partial payment for the acquisition of the hydrocarbon and process technology businesses.

YUKOS plans to complete the purchase of the Hydrocarbon and Process Technology businesses for $100 million as previously announced. YUKOS said separately that in case the acquisition of Kværner's hydrocarbons and process technology businesses falls through, it will offer employment to employees of those businesses and make up financial losses caused by wage arrears if they decide to work for YUKOS.