Davie Yards (TSX:DAV) received confirmation that its client Ocean Hotels has finalized a $100m loan agreement with Export Development Canada (EDC) for the financing of two Multipurpose Accommodation Vessels contracted at Davie.
“Now that our client has secured its financing with EDC, we will be able to restart construction of the Ocean Hotels vessels, which has been suspended for a long period” said Steinar Kulen, President and Chief Executive Officer at Davie, and he continued; “Those newbuilding projects are important to maintain a good level of activity at the yard, and this is good news for our employees and their families. I am glad that they will have a much better Christmas than last year when we were forced to lay off people temporary”.
One year ago, on December 17, 2008, the Canadian government authorized EDC to make available up to $358m in financing for Davie. From this facility, Davie’s client, Cecon, already has entered into a $200m senior secured loan for financing their three Offshore Construction Vessels on contract with Davie. Now Davie’s other client, Ocean Hotels has entered into a senior secured loan for $100m. In July this year, Davie entered into a loan agreement with EDC of up to $40m as pre-funding of the $100m loan to Ocean Hotels to secure design, engineering and supplies to the project. This loan is repaid in full with the first payment from Ocean Hotels received.
Delivery of Ocean Hotels vessels is planned for 2011. Davie total backlog of five vessels remains solid at $530m.