Receivers called in at Cammell Laird

News - April 20, 2001

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The receivers appointed to handle the affairs of British-owned shiprepair and shipbuilding concern Cammell Laird say they believe they have a 4-5 week 'window' within which to negotiate a sale of the company before radical action such closure of some parts of the company are necessary.

PricewaterhouseCoopers was appointed as receiver to Cammell Laird Group Plc on 11 April after trading in Cammell Laird's shares was suspended.

The good news for the company is that the receiver believes Cammell Laird has sufficient workload to sustain it for some time. In a statement released at the time, PricewaterhouseCoopers said, "We will continue to trade the company while seeking a goingconcern sale. We are encouraged by the information we have from the company so far, and are actively looking to maximise assets and secure the future for Cammell Laird".

The ailing British shiprepair firm called in the receivers with debts of in excess of £120 million after Royal Bank of Scotland declined to extend overdraft and payment facilities on a £50 million loan to Cammell Laird. Cammell Laird was also due to makeinterest payments on certain bond debts at the time. At the time that its shares were suspended, the shares were worth just 6 pence, and the company valued at just £17.3 million, compared with a share price of 141.5 pence and market capitalisation of £54 million last year.

In the weeks preceding the decision to call in the receivers, Cammell Laird had recruited financial advisers Close Brothers to help it to deal with its mounting debt problems. These date from late last year, when it lost a £50 million contract to lengthen Costa Crociere's cruise ship Costa Classica, having already built the new centre section for the ship, and then failed to win the loan guarantees it needed to build two cruise ships for Luxus in the US.

Edward Klempka, who leads the PricewaterhouseCoopers team at the company, confirmed that there had been a total of four tentative expressions of interest in the acquisition of some or all of those parts of Cammell Laird that are in receivership.

It is thought that some of these may have come from parties that also expressed an interest in the company following Close Brothers efforts to restructure it. Swan Hunter, the Tyneside-based yard that was itself in receivership not long ago, is believedto be among the parties interested in parts of Cammell Laird.

Having been appointed as receivers, Klempka and his colleagues from PricewaterhouseCoopers immediately began work on a new business plan for the company, and said a 4-5 week window existed within which it was hoping to negotiate a sale or break up of thecompany.

Klempka said that the business plan that Close Brothers was working on with Cammell Laird's management in the weeks before the company called in the receivers had 'failed' because it had run out of time, and would not form any part of the new plan.

Cammell Laird Group Plc is the holding company for all of the operating subsidiaries within Cammell Laird Holdings Plc. As Klempka explained, the overseas operations of Cammell Laird - the recently acquired businesses in the US, Marseilles, France, and the company's operations in Gibraltar, together with a number of UK subsidiaries - remain outside the current arrangement with the receivers.

Klempka said that, in law, the foreign operations were stand-alone businesses with their own sources of funding. In the short term, therefore, they are not affected by Cammell Laird Group Plc's financial problems, but in the long term they could be disposed of as the group is restructured.

Cammell Laird currently employs around 3,500 staff, having laid off 450 in the aftermath of the cancelled Costa Classica contract.

The end of March had seen some good news for the company in the form of a £5 million contract from the UK Ministry of Defence, but this was not sufficient to reverse the decline in Cammell Laird's fortunes.

More recently, the receivers met with contracts personnel at the Ministry of Defence to negotiate payment for the work Cammell Laird's Birkenhead yard is carrying out on the RFA Argus, a helicopter carrier which it is converting into a hospital ship.

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