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    Davie closes first tranche of share issue

    News // May 7, 2009

    Davie Yards in Canada has announced that it has closed a first tranche of its previously announced US$20 million private placement of common shares. This allows Export Development Canada (EDC) to release the first advance under the US$200 million loan to Davie’s client Cecon ASA.

    Davie issued a total of 163,432,425 common shares at a price of CDN$0.10 per share for aggregate consideration of approximately US$14.4 million. The foregoing includes 49,788,200 shares issued to Offshore Holding AS, the corporation’s indirect controlling shareholder, on conversion of a loan and accrued and unpaid interest in the amount of approximately US$4.1 million owed by the corporation to Offshore Holding AS.

    The shares will be subject to a hold period of four months after the closing date. The proceeds of the private placement will be used for working capital requirements.
    The private placement is part of a previously announced financial restructuring of the corporation that included loans from Investissement Québec in the aggregate amount of US$12.7 million and amendments to existing construction contracts with Davie’s clients for an aggregate price increases of US$95 million. Davie expects to close a second tranche of the private placement for proceeds of approximately US$6.6 million in the coming days.
    In addition, Davie has, together with EDC, rearranged part of the US$300 million loan and guarantee scheme provided to Davie by the Government of Canada in December 2008.

    From this scheme Davie’s client, Cecon, has entered into a loan agreement for a US$200 million senior secured loan with EDC for the financing of the Cecon’s three vessels under construction at Davie.

    The loan will allow Cecon to draw up to US$200 million in construction financing prior to delivery of the vessels. By the closing of the private placement all conditions precedent to the loan have been satisfactorily met.
    Pareto Securities AS and Dundee Securities Corporation acted as financial advisor and agent to the Corporation in connection with the offering.
    The completion of the corporation’s financial restructuring plan will also require the funding of a US$100 million EDC facility to Ocean Hotels plc and the renegotiation of the Investissement Québec loan facilities to pre-fund tax credits and employment obligations.

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