Canada fronts $350M for Norwegian-dominated yard

Published Dec 18, 2008
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Quebec Davie

Norwegian-dominated Davies Yards of Quebec Canada has been offered up to C$350 million in export guarantees by a Canadian government export finance agency.

The latest financing offer for Davies Yards Inc., Canada’s largest yard, is one of many in the past year, just as Davies in Quebec gets set to layoff workers.

The offer to help a Norwegian-dominated enterprise comes just days after ship and yard interests in Norway were extended some $7 billion in export credits by a Norwegian government anxious to guarantee all new-build ships undersigned by the country’s shipping elite get built. Now Canada, too, is helping build Norwegian ships.

Testimony to the convoluted ownership pattern in Norwegian offshore circles, it was Norway-based TECO Maritime that informed Norwegian shareholders of the Canadian government support. Yet TECO owns just a 14 percent share in Norway-based Offshore Holding, a company that owns 71.4 percent of Norway-based Davies Holding.

Yet in just over a year, Norwegian boldness has given French-Canadian Davies five shipbuilding contracts worth US$410 million with CECON and Ocean Hotels. Ocean is owned 12 percent by the very Offshore Holding that owns 71 percent of Norway-based Davie Holding — holder of 72 percent of Toronto-listed Davie Yards Inc. (down 12.5 percent in Wednesday).

Canada’s International Trade Minister Stockwell Day said Wednesday the finance help would ensure the five Canadian-built ships for two Davies customers would up Canada’s yard quality.

“Today’s announcement will help ensure that Davie remains a contributor to Canada’s shipbuilding capacity,” Day said.

Yet the Conservative Canadian government recently said that new money for Canadian yards would go toward mostly naval ships and vessels of use in the arctic. Of some interest, an agency of the provincial Quebec government, Investissement Quebec, recently offered to loan Davies C$10 million.

“What we have negotiated is a normal scheme for shipbuilding, and it’s more or less in line with anything you can get anywhere in the world,” Davies Yards chief exec Steinar Kulen told

He said he applied for and got the finance help.

“(Government help for shipping) was something that had been lacking in Canada,” he said.

Now Davies is one of few Canadian shipyards healthy enough and with cranes large-enough to build and fit out large vessels. Wellbeing started with Norwegian money.

Shortly after Norwegians bought up Davies yards in search of shipbuilding capacity, TTS Marine Cranes of Bergen Norway penned a deal to deliver three offshore cranes to Quebec for US$6.7 million.

The order was aimed at building Norway-based CECON’s three offshore construction ships. CECON is understood to have agreed to pay $40 million more for the ships than first agreed if the Feds stuck to their offer of a rebate on built ships and Davies agreed to raise buyable stock.

A free-trade agreement signed in 2007 between Canada and Norway included a clause guaranteeing a Canadian government rebate on expenses for ships built in Canadian yards.

CECON called the government’s refund on expenses “grant refund guarantees towards all remaining pre-delivery instalments” on the company’s three new-build ships at Davie yard.

Cecon said its refund was $160 million but a $200 million bank loan was also secured.

“(The Canadian government) announcement is an important milestone towards completing the refinancing and restructuring of Davie Yards and resuming normal operations in Cecon`s new-build program.”

Shipbuilders’ rebate

Before the Federal largesse, the only new money for the yard at the foot of scenic Mount Frontenac in Quebec City was Norwegian. Interest from Norway has brought offshore orders and orders for Norwegian suppliers.

Employees of the once Canadian-owned yard group told recently that the lack of land-based, heavy-lift cranes were the yard’s only weakness back in 2007, something new owners at Davies have tried to fix.

Though serving their yard capacity needs during the recent ship-building boom, the Norwegians nevertheless supplied the yard with new equipment and heavy lift capacity.

Norway interests

Though not yet willing to live in Canada, Davie’s 54-year-old chief exec still brings 20 years of Norwegian maritime experience from Aker Yards, Kleven Maritime, Ulstein and Rolls Royce Marine. His board reach extends across the Norwegian shipping scene.

Other Norwegian interests in Davies include Bergen Group — a newly assertive Norwegian yard player — with its 10 percent stake.

The Quebec yard’s fabled history building navy ships, fisheries vessels, square sails and river steamboats is now a Norwegian management success story.

The yard that Captain Alison Davies founded nearly 200 years ago to build specialist vessels has revived by yard-savvy Norwegians before Canadian politicians ever took an interest.

Tags: Davies Yards


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