Cammell Laird Conducts Strategic Review

Tuesday, March 20, 2001
Bonds issued by British shipbuilder Cammell Laird held steady at deeply-discounted levels on Tuesday after the company unveiled a strategic review which could include a debt restructuring. Investors quoted Cammell's 125 million euro high-yield bond due October 2010 at 11 to 13 percent of face value at around 1245 GMT, down by around half a percentage point from Tuesday's opening. The bonds have been trading at levels that clearly imply default for some time, dealers said. Investors said they expected Cammell to miss the first coupon payment on the bond, due on April 15. "The market was clearly expecting this and the news looked as though it had already been priced in," said Martin Reeves, vice-president of fixed income at Alliance Capital. Cammell, which risks losing a $500 million contract with U.S. cruise liner company Luxus if it cannot agree a support package with the UK government, said on Tuesday it had appointed financial advisers as part of a strategic review. The Liverpool-based company said Close Brothers and its U.S. partner Houlihan Lokey would help it examine options including raising finance, forming strategic alliances, and restructuring principal and interest on its bonds. It said the review's outcome would be announced before Cammell's financial year-end on April 30. Cammell's share price fell more than three percent after the restructuring was announced, to 7.5 pence. The shares were trading at more than 100 pence when the bond was launched last October, but have fallen in response to disappointing news over the past few months including the wrangling with the Department of Trade and Industry over the Luxus contract. Shares also took a knock after news of the cancellation in January by Italian customer Costa Crociere of a 51 million pound contract to refit a liner. Last Friday, credit rating agency Standard & Poor's cut Cammell's long-term credit rating to CC from CCC and its senior unsecured debt to "C" from CCC-minus. It said in a statement that the company's ratings would stay on review for a further downgrade. - (Reuters)

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