Kvaerner gets Russian lifeline and CFO
In a last-minute rescue attempt, engineering giant Kvaerner has been thrown a one-week lifeline from its largest shareholder after the company said on Friday it was on the brink of insolvency.
Friday also saw the appointment of Finn Berg-Jacobsen as acting chief financial officer and Larry Simpson as senior vice president of human resources. This followed the resignation of Kjell Almskog as president and CEO last Thursday.
Yukos, the Russian oil company which owns a 22% stake in the Anglo-Dutch company, put up the latest tranche of capital to keep Kvaerner in business for seven more days.
In a statement Yukos said: ‘The proposal will provide Kvaerner with working capital for the next week, pending completion of negotiations on the restructuring of debt and establishing a guarantee consortium for an equity rights issue.’
The company’s chairman said today that, although there was work to be done, he believes Kvaerner can avert insolvency.
Yukos said it expects financial institutions and shareholders to contribute to Kvaerner’s rescue which is expected to cost about £341m with convertible notes and debt forgiveness, and that banks would agree to a standstill and refinancing of debts. It also plans to use its majority stake to support the rescue plan by attracting additional capital.
The company, which had once seen its shares valued at 75 Norwegian kroner (NOK), watched its shares plunge, closing below 10 NOK. Today, the company’s shares were suspended in both the London and the Oslo stock exchanges.
Kvaerner announced last Friday that it risked bankruptcy unless it found a solution to its financing problems by today. According to the BBC, the company’s senior managers spent the weekend in meetings with investors, banks and lawyers to negotiate for 500m NOK (£40m) to pay its creditors.
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Insolvency D-day looms for Kvaerner
