Davie Yards Inc.

Davie Yards Inc.

May 12, 2009 19:48 ET

Davie Finalize its US$20 Million Equity Raise

LEVIS, QUEBEC--(Marketwire - May 12, 2009) - Davie Yards Inc. ("Davie" or the "Corporation") (TSX:DAV) announced today that it has closed the second and final tranche of its previously announced US$20 million private placement of common shares.

Davie issued a total of 80,567,580 common shares to Cecon ASA ("Cecon") at a price of CDN$0.10 per share for aggregate consideration of approximately US$6.6 million. The shares will be subject to a hold period of 4 months after the closing date.

The private placement is part of a previously announced financial restructuring of the Corporation that included loans from Investissement Quebec in the aggregate amount of $12.7 million and amendments to existing construction contracts with Davie's clients for an aggregate price increases of US$95 million.

In addition, Davie has, together with Export Development Canada ("EDC"), rearranged part of the US$300 million loan and guarantee scheme provided to Davie by the Government of Canada in December 2008, and from this scheme Davie's client, Cecon has entered into a loan agreement for a US$200 million senior secured loan. EDC has funded the first advance to Cecon under this loan and Cecon has resumed payment of its instalments to Davie.

"I am pleased we are close to finalizing our financial restructuring", said Steinar Kulen, Davie's CEO. Mr Kulen continued: "With the payment of due instalments from Cecon, we have resumed normal business and it is nice to see the yard in full operation. We have 1000 employees back at work and require another 500 to complete our current orders. The completion of the financial restructuring plan will also require the funding of a $100 million EDC facility to Ocean Hotels Plc. and the renegotiation of the Investissement Quebec loan facilities to pre-fund tax credits and employment obligations. We are presently working on those issues".

About Davie Yards Inc.

Davie Yards Inc. owns and operates the Davie yard in Quebec. With over 180 years of operating experience and approximately 1100 employees, 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 the year ended December 31, 2008 as well as the Annual Financial Statements for the year ended December 31, 2008, and the Corporation's Annual Information Form dated March 29, 2009.

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