Cammell Laird Rescue Attempt in Danger

Wednesday, February 21, 2001
The British government's attempts to save 1,500 jobs at struggling shipbuilder Cammell Laird were apparently in grave danger on Wednesday after the chairman of a cruise firm offering Cammell a lifeline contract reportedly said the deal looked dead.

"We have been offered impossible terms. I do not want to be the one to bring bad news but you cannot keep pushing water up a hill indefinitely," Luxus chairman Jim Davis reportedly said. It was also reported that the shipbuilder is undergoing further difficulties, specifically that the government was now insisting on a $150 million performance bond to protect itself should the investment fail.

With assets of only $110 million, Cammell would most likely not be able to secure banking support for such a bond.

On Monday the government offered to share an extra $100 million in risk with Cammell to underwrite the risk of the contract to build two cruise vessels for Luxus falling through.

The $500 million contract could provide the ailing shipbuilder with enough work for the next three years.

Cammell is understood to have sent a letter to the Department of Trade and Industry seeking clarification of Monday's aid offer.

A top Cammell official, reportedly said that Luxus was "jumping the gun" by writing off the deal before hearing from the DTI.

Cammell Laird has been in trouble since last August, with stock dwindling by about 65 percent in value, when the firm terminated a contract with Italian shipping firm Costa Classica after a legal dispute.

Bonds of Cammell Laird tumbled around nineteen points on Wednesday , based on these reports. - (Reuters)

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