Cammell Laird Shares Fall On News

Thursday, February 08, 2001
Shares in Cammell Laird fell nearly nine percent on Thursday after news the British shipbuilder's $500 million contract with U.S. firm Luxus was at risk, threatening a second blow to the yard in as many months. Since it began a dispute with Costa Classica -- an Italian unit of U.S group Carnival Corp. -- last Autumn over a key cruise ship contract, which was subsequently terminated, its shares have fallen dramatically from a year high of 147p. While the Costa Classica dispute raged on -- leading to 450 job losses and an expected impact on year results -- the company was hopeful that the Luxus contract would provide bedrock work throughout the group for the next three years.

However, after the market close on Wednesday, Cammell Laird Chairman Juan Kelly said that unless the government acted quickly so that loan guarantees were received by the end of February, the lucrative contract could fail. "It's urgent. I'd like to think it (loan guarantee approval) was certainly this month," Kelly said. "Otherwise we are going to run into trouble with the operating aid deadline."

Kelly said he had written to British Trade and Industry Secretary Stephen Byers to urge the speedy approval of loan guarantees for Luxus, which has ordered two luxury liners from Cammell Laird. A spokesman told Reuters on Thursday he expected a statement from the DTI on the issue around the middle of next week. He said there was not yet any indication from the DTI as to which way it would go on the timing of the guarantees.

Without the guarantees, Luxus, which is a start-up company, may not get bank loans to fund the orders, sources at Cammell Laird have said. The guarantees could cover some 60 percent of the value of the contract. When the operating aid -- a separate 32 million sterling package from a government shipbuilding intervention fund -- was granted in December, the DTI said a decision on the loan guarantees would be made in the same week. The delay has made qualifying for the operating aid almost unachievable if the ships cannot be finished by December 2003, Kelly said. - (Reuters)

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