Davie Yards client loses credit line

The Quebec-based shipbuilder Davie Yards Inc has been advised by its largest client, Cecon ASA (Cecon), that it has received a notice of cancellation of its $200 million senior secured credit facility from the participating lenders and DnB NOR Bank ASA as agent.

As a result, Cecon has advised that its board of directors will actively consider and pursue all available strategic and financing options and has retained First Securities and Pareto Securities as financial advisors to assist it in reviewing all options open to it.

Davie Yards currently has five vessels on its orderbook: three offshore construction vessels for Cecon and two multipurpose accommodation vessels for Ocean Hotels Ltd.

On 11 December 2008, Davie announced that it was laying off its 1,100 shipyard workers until it had completed key steps in its financial restructuring plan. It had hoped to get its employees back to work by mid-January and had made some significant progress in its restructuring including wringing price increases from its two clients, finding an industrial investor (Norway’s Bergen Group) and getting financial support from the Canadian Government. Today’s news from Cecon would seem to put all that in jeopardy.