Threat to 7,000 UK engineering jobs as Kvaerner tries to stave off bankruptcy

Click to follow
The Independent Online

Up to 7,000 UK jobs were at risk last night as crisis talks continued in an effort to prevent the collapse of the Norwegian engineering group Kvaerner.

Up to 7,000 UK jobs were at risk last night as crisis talks continued in an effort to prevent the collapse of the Norwegian engineering group Kvaerner.

Negotiations with bankers, shareholders and financial institutions broke off last night without agreement and will resume this morning in an attempt to thrash out a 4bn crown (£328m) rescue package.

Kvaerner, which took over the UK conglomerate Trafalgar House in the mid 1990s, is seeking around 2bn crowns in new debt finance from the state-owned Norwegian bank DMB. But it has been told that in return it must raise a similar amount from shareholders through a rescue rights issue.

Critically, the company needs around 900m crowns in short-term financing to tide it over the next three months. Without agreement on a refinancing, the group will be pushed into bankruptcy. "Things are still on the brink, the ultimate could still happen," one source close to the company said yesterday.

The talks, which coincided with the suspension of Kvaerner shares, hinge on its ability to get the rights issue underwritten. The group has already been forced into two rights issues in the past two years. Its biggest shareholder, the rival Norwegian engineering company Aker Maritime, is trying to force Kvaerner into a merger as a way out of its problems.

Kvaerner employs 1,500 people in Aberdeen in an oil and gas fabrication business. Other staff locations are Portsmouth, Teesside and London, bringing total UK employment to 7,000. The total worldwide workforce stands at 35,000. The Norwegian government yesterday rebuffed reports that it was about to step in and bail out Kvaerner. But the group received a boost after the Scottish-based Stena agreed to pay Kvaerner 1bn crowns for the delayed delivery of an oil drilling rig from its Warnow shipyard in Germany. A Kvaerner spokesman added that other ship deliveries would bring in an additional 2bn crowns over the next three months.

Kvaerner has been in financial difficulties for the past two years. But the latest crisis was sparked by the terrorist attacks in the US, which prompted its original debt finance provider to pull out.

Comments