Kvaerner avoids collapse

November 26, 2001 Posted: 0939 GMT

LONDON (CNN) -- Kvaerner, the troubled Anglo-Norwegian construction and engineering company, has received 250 million crowns ($27.8 million) to avert imminent bankruptcy.

The emergency loan from banks and one of its suppliers should keep the company afloat until its shareholders meet on Thursday to decide its future.

"I'm very pleased to be able to say that we are still in operations and that it is not necessary to ask for bankruptcy," chairman Harald Arnkvaern told NRK public radio on Monday.

The 148-year-old company, which has about 35,000 employees in 35 counties, held marathon talks over the weekend with major shareholder Aker Maritime, which has said it would like a merger.

Kvaerner, whose market capitalisation has plunged to about 1.3 billion crowns,  desperately needs a longer-term bailout to overcome losses and huge debts that have already forced it to shrink from a peak of more than 80,000 employees in the late 1990s.

It ran up huge debts after an over-optimistic expansion in the 1990s, including the acquisition of British conglomerate Trafalgar House. It diversified into businesses including cruise lines and a scheme for launching space rockets from a converted oil platform in the Pacific Ocean.

Aker's plans would give it 60 percent control of the merged company but Kvaerner rejected that offer on Sunday.  

"There was no breakthrough ... but we got a bit closer," Kvaerner spokeswoman Marit Ytreeide told Reuters. She said that Kvaerner had accepted for the first time that a Kvaerner-Aker merger was a possibility.

But she said Kvaerner's board, fearing that it might be forced to sell itself at too low a price, was insisting on an independent assessment of the two groups' values.

Shareholders will vote on a rescue plan worked out last month by the board of Kvaerner with backing from Russian oil firm YUKOS.  Both YUKOS and Aker own just over 20 percent of the shares and any long-term rescue probably has to win the support of both.

The board plan, backed by YUKOS, includes a 3 billion crowns rights issue, a possible conversion of 4.5 billion crowns of debts into equity and little change in current shareholdings.

Aker's plan includes an Aker-Kvaerner merger, with Aker ending up with 40-60 percent of Kvaerner, a 2.0 billion crowns rights issue and no debt-to-equity deal for creditors.

Thursday's vote will only be on the YUKOS plan, Aker's proposal was unveiled too late for consideration. But it needs backing from two-thirds of shareholders.

Reuters contributed to this report