Davie Yards Inc.
TSX : DAV
TSX : DAV.WT

Davie Yards Inc.

December 11, 2008 16:40 ET

Temporary Layoffs at Davie Yards

LEVIS, QUEBEC and OSLO, NORWAY--(Marketwire - Dec. 11, 2008) - Davie Yards Inc. ("Davie" or the "Company") (TSX:DAV) has announced temporary layoffs for the 1,100 shipyard employees at its facility in Levis, starting this weekend and continuing until mid-January, 2009, subject to completing key steps of the Company's refinancing plan.

This decision was taken with a view to preserving limited cash reserves in order to allow time and the necessary resources for the completion of the refinancing plan announced in late August of this year. Davie's cash position has been negatively impacted by its clients' inability to make their installments under their contracts without having refund guarantees in place.

Steinar Kulen, Davie's Chief Executive Officer, explained that all efforts were being pursued in a very difficult financial market environment to complete the refinancing plan and to thus ensure the restart of Davie operations shortly.

Refinancing Plan Update

In August 2008, Davie developed an operational improvement plan currently under implementation, as well as a $90 million financial restructuring plan. The $90 million financial restructuring plan consists of price increases of $60 million with existing clients, which have been agreed to in principle, subject to certain conditions, including that Davie obtain refund guarantees, as well as a debt and equity injection of $30 million, of which $12.7 million has been obtained in loans from Investissement Quebec, and a US$10 million intention from the Bergen Group of Norway, an important strategic industrial investor, was obtained earlier this week.

All of these elements of the plan are conditional on Davie obtaining refund guarantees in favour of its clients to support their financing of the $700 million of contracted vessels currently under construction and Davie obtaining short-term funding.

Davie is pursuing discussions with Export Development Canada, which has been cooperative and is confident that the necessary financing support can be obtained shortly.

Mr. Kulen added, "Davie can be very competitive for the construction of complex vessels, and the proposed partnership announced this week with the Bergen Group will further enhance our capabilities and competitiveness, thus assuring a promising future for the Davie shipyard.

"We appreciate the valuable support of our stakeholders to help us work through this current liquidity problem," added the Davie CEO, who continued, "we offer our sincere thanks to our employees, our suppliers, regional partners, as well as the governments, which are working closely with us."

About Davie Yards Inc.

Davie Yards Inc. owns and operates the Davie yard in Quebec. With over 180 years of operating experience and 1,100 employees, the shipyard is the largest in Canada and among the largest and most sophisticated in North America. The company has a primary focus on complex offshore oil services vessels as well as the Canadian naval and arctic maritime needs. 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 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 Company 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 Company's Management's Discussion and Analysis for Q3 2008 and the year ended December 31, 2007 as well as the Annual Financial Statements for the year ended December 31, 2007, and the Company's Annual Information Form dated March 25, 2008.

Contact Information

  • HKDP Communications et affaires publiques
    Marie-Christine St-Pierre
    Consultant
    418 523-3352 ext. 231
    Cell.: 418 952-0047
    mcstpierre@hkdp.qc.ca