Norwegian shipbuilder Havyard Ship Technology (HST) is to restructure its debt via bankruptcy, which could have a knock-on effect on its parent Havyard Group.
The Leirvik-based shipyard's board of directors has decided to seek debt negotiations under Section 2 of Norway's Bankruptcy Act, Oslo-listed Havyard Group said on Tuesday.
"The decision is part of the planned restructuring of the shipyard operations in Havyard Group, and is based on the fact that HST is unable to settle its obligations to creditors," the group said.
The expected final settlement from ongoing projects is not expected to fully settle HST's obligations to its creditors, Havyard added.
A request for the negotiations was filed with Sogn og Fjordane District Court on Tuesday, the group said.
Wider effects on the group
Havyard Group said impacts from HST's failure would likely also be felt within the yard's sister companies and in the group as a whole.
"[Havyard Group] is working on analysing the effects that debt negotiations in HST could have on other companies in the [Havyard] group, and expects to be able to report this shortly," the group stated.
"However, it must be expected that both the parent company and sister companies to HST must bear losses — in line with HST's other creditors — as a result of the debt negotiations initiated in HST."
Havyard said existing shipbuilding projects at HST will continue as planned and are not expected to be affected by the talks with creditors.
This is because the construction projects have been organised under New Havyard Ship Technology, a wholly owned subsidiary of HST.
Norway's Bankruptcy Act allows for all or part of a bankrupt business to be salvaged by a new or existing entity and form the basis of a viable business.
The succeeding entity can acquire all or part of the business from the bankruptcy estate and possibly from its mortgagees and pledgees.
HST lost its equity and fell in breach of its loan covenants in November, but managed to strike an agreement with its lenders, as TradeWinds has reported.
The breaches were caused by heavy losses on certain vessel projects including five battery-powered ferries that HST is building for Norwegian operator Fjord1 and two fishing vessel prototypes.
Havyard fired its chief executive Geir Johan Bakke "with immediate effect" on 2 December, following huge losses sustained by HST.
