Norway’s Scana Industrier ASA has decided to cease further funding of its subsidiary Scana Steel Stavanger AS, a provider of steel components to the offshore oil and gas industry.
Consequently, Scana Industrier has said that there is no basis for a solvent winding-up of the company and the Board of Scana Steel Stavanger resolved to file for bankruptcy March 3, 2015.
Scana Steel Stavanger has over a long period incurred substantial losses and has implemented a strong restructuring and workforce reduction in an attempt to achieve profitable business. Coincident with the restructuring and workforce reductions Scana Industrier has attempted to find new owners for Scana Steel Stavanger without success. It has not been possible to achieve profitable business and adequate order reserves, Scana Industrier has said.
Below is a statement of Scana Industrier regarding the Scana Steel Stavanger bankruptcy:
“Scana Industrier has considered if there is basis for a solvent winding-up of Scana Steel Stavanger, but is not able to cover the costs and the liquidity requirements involved in a solvent winding-up. Nor has it been possible to gain external financing. Thus, filing for bankruptcy is the sole option for the Board of the company, and the financial situation implies that the company must file for bankruptcy now.
In connection with the bankruptcy Scana Industrier will incur additional costs related to guarantees for certain Scana Steel Stavanger obligations. Except for this, Scana Industrier has currently not identified further funding obligations related to the bankruptcy in Scana Steel Stavanger. It is expected that the group’s banks will cover their claims against Scana Steel Stavangerthrough sale
of assets granted as collateral security to the group’s banks.
“Scana Industrier sincerely regrets the negative impact the bankruptcy of Scana Steel Stavanger will have on the Company’s business partners and the local community affected.”
Scana Industrier is actively pursuing an extension of the Scana group’s existing credit facilities with the bank syndicate. As previously communicated, these facilities expire at 22 March 2015 but the bank syndicate has on certain terms confirmed that the facilities are extended to 22 June 2015.
This gives the group and the bank syndicate time to negotiate terms and conditions for a more permanent financing solution. In this context, the bank syndicate has confirmed that they will not consider the insolvency proceedings in Scana Steel Stavanger as an event of default under the group’s credit facilities.
Claims under the credit facilities caused by the bankruptcy filing will only be brought against Scana Steel Stavanger, and not against other companies in the group, unless this is necessary in order to bring claims against and be covered by securities granted by Scana Steel Stavanger.
Scana Industrier sincerely regrets the negative impact the bankruptcy of Scana Steel Stavanger will have on the Company’s business partners and the local community affected.
Except as set out above, the bankruptcy in Scana Steel Stavanger will in the boards assessment not have any substantial adverse effects for other companies in the group. The board is, however, of the view that a bankruptcy in Scana Steel Stavanger may be a contributing factor in connection with a permanent extension of the credit facilities on new terms.”