Cecon Secures Alternative Financing, Amends Contracts with Davie Yards

Cecon has received an indicative term sheet from Export Development Canada ("EDC") for a US $200 million senior secured credit facility for its newbuilding program of three offshore construction vessels at Davie Yards Inc. The EDC financing in combination with estimated operating cash flow is expected to cover remaining yard instalments until delivery of the vessels. Following delivery, the loan contemplated by the term sheet will be converted to a 12-year senior secured term loan.

The term sheet has several conditions which need to be met, and Cecon and EDC are working with the aim to complete the loan documentation by the end of February/ early March.

Cecon and Davie Yards have agreed on amendments to the construction contracts for Cecon's three vessels under construction. Under the terms of the amendments, Cecon will accept price increases totaling US $23 million, with a possibility for Davie to achieve a delivery bonus of US $1 million for each of Cecon's vessels II and III (hulls 718 and 719) if the vessels are delivered within the revised delivery dates. Delivery dates have been revised to January 29, May 15 and July 16, 2010 for the three vessels, respectively.

Furthermore, Davie Yards has received notice that it will receive a loan of US $20 million from EDC to resume operations on the yard and construction of the Cecon vessels. The loan will be included in the US $200 million credit facility to Cecon upon the closing of this loan.

Said CEO Terje Tellefsen, "The contemplated EDC facility will effectively replace Cecon's US $200 million senior secured credit facility with DnB NOR Bank which was cancelled on January 19, 2009, and is expected to secure Cecon's pre-delivery financing requirements taken into account the estimated operating cash flow. We are extremely pleased with the term sheet received from EDC. The Canadian government and EDC have been very supportive and expeditious in developing a possible financing alternative for Cecon."