Davie Yards Inc.

Davie Yards Inc.

February 25, 2010 13:10 ET

Davie Yards to Restructure Under the CCAA

LEVIS, QUEBEC--(Marketwire - Feb. 25, 2010) - Davie Yards ("Davie" or the "Corporation") (TSX:DAV) announced today that it 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.

About Davie Yards Inc.

Davie Yards Inc. owns and operates the Davie yard in Quebec. With over 185 years of operating experience, the shipyard is the largest in Canada and among the largest and most sophisticated in North America. The Corporation has a focus on building large and complex offshore service vessels and rigs, and other sophisticated vessels for commercial and governmental use. Its shares are traded on the Toronto Stock Exchange (DAV). News and information are available at www.davie.ca.

Forward-Looking Statements

This news release contains forward-looking information within the meaning of applicable Canadian securities legislation. These statements include those relating to statements that are not historical facts, and reflect the current intentions, plans, expectations and beliefs of Davie's management ("Management"). Such forward-looking statements reflect Management's current beliefs and are based on information currently available to Management. Forward-looking statements involve known and unknown risks, uncertainties and other factors outside Management's control. A number of factors could cause actual results of Davie to differ materially from the results predicted in the forward-looking statements, including, but not limited to, risks associated with the Corporation's fiscal results, conditions to the completion of the refinancing plan, working capital requirements, major disruptions of production, a downturn in economic conditions, competition and sensitivity to the oil and gas industry and other factors.

Although the forward-looking statements contained herein are based upon what Management believes to be reasonable assumptions, Management cannot assure investors that actual results will be consistent with these forward-looking statements. Certain assumptions underlying the forward-looking statements contained in this news release include Management's assumptions regarding market outlook for the construction of complex offshore vessels as well as the assumptions that new vessels will be delivered on schedule and that the Corporation will attract and retain key personnel in key positions. These forward-looking statements are made as of the date of this release, and Management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. Readers are cautioned not to place undue reliance on these forward-looking statements. For additional information with respect to certain of these and other assumptions and risks, please refer to the Corporation's Management's Discussion and Analysis for quarter ended March 31, 2009 and the year ended December 31, 2008 as well as the Financial Statements for the quarter ended March 31, 2009 and the year ended December 31, 2008, and the Corporation's Annual Information Form dated March 29, 2009.

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