Kvaerner's future uncertain as owners balk at funding plea

The future of the ailing Anglo-Norwegian engineering group Kvaerner was unclear last night after its major shareholder, Yukos, refused to rush through its $100m (£69.7m) purchase of two of the group's units.

The company's 35,000 employees will today learn if a marathon set of talks in Oslo lasting late into the night yielded a solution to the company's cash crunch. If not, the group may have to go into administration, which will threaten 7,000 UK jobs.

Kvaerner must find 1bn Norwegian kroner (£40m) to pay its creditors before this morning. It had hoped that Yukos, the Russian oil company, would speed up its purchase of at least one of Kvaerner's hydrocarbon and processing technology units, agreed early last week.

A spokesman said: "Yukos wanted more time. We were trying to pull together a deal in the space of a couple of days that would normally take between one month to six weeks to conclude."

Kvaerner's board of directors spent the weekend in meetings with its investors, bankers and lawyers, trying to free some liquidity from elsewhere in the group. This includes Nkr 1bn in receivables from its Finnish shipbuilding subsidiary, which its parent company is unable to access for legal reasons.

Earlier this month, Yukos increased its stake in Kvaerner from 12 to 22 per cent, prompting speculation that Russia's second-biggest oil company planned to cherry-pick parts of the business with the other major shareholder, Aker Maritime, the Norwegian shipping group. Kvaerner shareholders will vote on Friday whether to accept three directors nominated by Yukos for the board.

The company must also find a new chief executive. Kjell Almskog said he would leave at the start of November and not at the end of the year as planned.

Kvaerner is trying to refinance its debt and wants to issue up to Nkr 2bn in new shares to obtain long-term funding. Yukos and Aker Maritime won't commit itself to support the share issue.