Davie Yards has filed for creditor protection under the Companies' Creditors Arrangement Act ("CCAA") with the Québec Superior Court. After consideration of all available alternatives, the Board of Directors has determined to seek court protection under the CCAA in order to allow Davie to work on a new plan to secure additional financing and complete its projects currently under contract.
As previously reported, accumulated losses due to currency fluctuations and project cost increases related to delays of payment of installments by Davie's clients have affected the Corporation’s results of operations. Following a comprehensive review which was undertaken when Davie recently embarked on the most complex aspects of construction, the Corporation concluded that the learning process involved in building offshore vessels is more challenging than anticipated and has resulted in additional delivery delays and costs for the ships currently under construction. Davie has already begun to implement corrective actions in its operations and will concentrate its activities in order to be able to focus on implementing a financing plan while minimizing the impact on its clients.
In conjunction with the CCAA filing, Davie is implementing a temporary realignment of its operations designed to preserve its working capital while working on securing new financing. Davie will continue its shipbuilding activities with a reduced workforce of approximately 160 employees. Approximately 1590 employees will be laid off, most of them temporarily, starting Monday March 1st.
"This is a very unfortunate situation but we must realign our operations in order to get the time necessary to move forward on solid footing," said the new CEO of Davie, Mr. Gustav Johan Nydal, who has started last week. He continued, "We hope that we will soon be able to bring our valuable workforce back to work. We are committed to deliver the ships we have on order and we appreciate the support of our partners through this transition period."
The Corporation also announced that Mr. Donald Campbell is taking over as Chairman of the Board of Davie. Mr. Campbell is a senior strategy advisor with the law firm Davis LLP. Prior to joining Davis, he was Executive Vice President of CAE. Mr. Campbell previously enjoyed a distinguished career with Canada's Department of Foreign Affairs and International Trade, serving most recently as Deputy Minister of Foreign Trade and as the Prime Minister's Personal Representative for G-8 Summits (1997-2000). In addition, Mr. Campbell has served as Canada's Ambassador to Japan and Korea.
Mr. Steinar Kulen has decided for personal reasons not to take over as Chairman of the Board but will remain a director.