Thousands of UK jobs saved as Kvaener seals deal with banks on debts

The ailing Norwegian engineering group Kvaerner was rescued from collapse yesterday after patching together a deal with its banks to reschedule its short-term debts.

The ailing Norwegian engineering group Kvaerner was rescued from collapse yesterday after patching together a deal with its banks to reschedule its short-term debts.

But there was no agreement on the underwriting of a 2bn crown (£156m) rights issue, which the company needs to undertake to secure its longer-term financial future.

The temporary reprieve lifts the immediate threat to Kvaerner's 35,000-strong workforce, which includes some 7,000 UK staff employed mainly in offshore fabrication work.

After a marathon set of talks in Oslo lasting more than two days. Kvaerner's chairman, Harald Arnkvaern, emerged to announce that its banks had agreed to extend the repayment of an 800m crown loan until 31 December and draw up a new three-year 5.6bn crown credit facility. However, the new loan facility is conditional on Kvaerner successfully completing the rights issue and that is not yet assured. The company has so far got 500m crowns of the rights issue underwritten by a syndicate that includes its main creditor, Den Norske Bank. But it needs underwriting in place for at least 1bn crowns for the issue to go ahead.

A spokesman said: "We have made an important step but we do not underestimate the difficulties we face, in particular getting the support of our major shareholders."

Aker Maritime, Kvaerner's biggest shareholder with a 17.8 per cent stake, is not taking part in the rights issue although a Kvaerner spokesman said this was not essential to its success. Aker is attempting to force Kvaerner into a merger at a distressed price.

Kaverner shares tumbled 25 per cent to 6.6 crowns after they came back from a two-day suspension but some fund managers were surprised the fall was not much steeper.

The group's debts have ballooned from 5.6bn crowns at the end of June to 6.4bn crowns. But Kvaerner says that its assets outweigh its debts by a significant amount and it plans to reduce its debts further through the sale of assets including three shipyards.