Davie Yards Trims Employment at Levis Facility, Updates on Refinancing

Davie Yards has announced temporary layoffs for the 1,100 shipyard employees at its facility in Levis, starting this weekend and continuing until mid-January, 2009, subject to completing key steps of the Company's refinancing plan.

This decision was taken with a view to preserving limited cash reserves in order to allow time and the necessary resources for the completion of the refinancing plan announced in late August of this year. Davie's cash position has been negatively impacted by its clients' inability to make their installments under their contracts without having refund guarantees in place.

Steinar Kulen, Davie's Chief Executive Officer, explained that all efforts were being pursued in a very difficult financial market environment to complete the refinancing plan and to thus ensure the restart of Davie operations shortly.

Refinancing Plan Update

In August 2008, Davie developed an operational improvement plan currently under implementation, as well as a $90 million financial restructuring plan. The $90 million financial restructuring plan consists of price increases of $60 million with existing clients, which have been agreed to in principle, subject to certain conditions, including that Davie obtain refund guarantees, as well as a debt and equity injection of $30 million, of which $12.7 million has been obtained in loans from Investissement Quebec, and a US$10 million intention from the Bergen Group of Norway, an important strategic industrial investor, was obtained earlier this week.

All of these elements of the plan are conditional on Davie obtaining refund guarantees in favour of its clients to support their financing of the $700 million of contracted vessels currently under construction and Davie obtaining short-term funding.

Davie is pursuing discussions with Export Development Canada, which has been cooperative and is confident that the necessary financing support can be obtained shortly.

Kulen added, "Davie can be very competitive for the construction of complex vessels, and the proposed partnership announced this week with the Bergen Group will further enhance our capabilities and competitiveness, thus assuring a promising future for the Davie shipyard.

"We appreciate the valuable support of our stakeholders to help us work through this current liquidity problem," added the Davie CEO, who continued, "we offer our sincere thanks to our employees, our suppliers, regional partners, as well as the governments, which are working closely with us."