Cammell Laird’s Woes Continue

Wednesday, April 11, 2001
Trade in the shares and bonds of troubled British shipbuilder Cammell Laird was suspended on Wednesday, leaving investors and workers fearing the worst ahead of an announcement on its financial position.

The company, whose main shipyard at Birkenhead near Liverpool in northwest England was established in 1824, has been under threat of losing a key $500 million dollar deal with a cruise ship firm.

About 1,500 jobs at the Liverpool yard depend on the contract’s go ahead.

Cammell Laird's shares were suspended at their Tuesday closing price of six pence at the company's request. The company has been headed toward a downward spiral for the last few months with its shares having fallen by more than 90 percent since November, after Italian cruise operator Costa Crociere cancelled a 51 million pound ($74 million) refit contract, and on concerns the deal with cruise ship firm Luxus for two luxury liners might be called off.

The company's 125 million euro 12 percent bond due October 2010 was bid at 13 percent of face value on Tuesday.

The first interest payment or coupon had been scheduled to be paid in the next few days, but dealers said the bond had been trading at levels implying a high expectation of default since late February, when it tumbled on concerns the company would lose the Luxus contract.

The Department of Trade & Industry (DTI) said in February it would share an extra $100 million of risk with Cammell Laird to underwrite the possibility of the Luxus contract falling through. The DTI had already offered $300 million in loan guarantees to cover the contract. But Cammell Laird had been hoping for more, because without the guarantees, Luxus, a start-up company, might not get bank loans to fund the orders, Cammell sources said at the time.

The DTI said on Wednesday it could not comment on the state of the credit guarantees package.

A spokesman for the AEEU trade union, which represents about 800 out of Cammell Laird's total workforce of 1,800 workers, said employees were deeply worried about possible job cuts.

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