Kvaerner teeters as cash runs out

ANGLO-Norwegian engineering and construction giant Kvaerner shocked the market today by announcing that it faces 'a serious and immediate shortfall of cash'. It said: 'Under these circumstances we cannot rule out bankruptcy.'

A spokesman said the cash could run out as early as Monday. Kvaerner's position appears to be so dire that it has been unable to draw on the final part of an 800m kroner (£63m) loan facility and another 500m kroner loan negotiated earlier. Legal considerations are preventing it from accessing 'considerable quantities of cash tied up in subsidiaries'. The group said it hoped to clarify its position by the weekend.

Kvaerner employs 35,000 staff in 35 countries, about 7,000 of them in Britain. Earlier this month Kvaerner cut 100 jobs at its British HQ in Olympia as it relocated to Oslo.

Chief executive Kjell Almskog resigned on Wednesday with effect from 1 November. He has been trying to refinance debt and dispose of assets in its paper and packaging division in the past few weeks.

Kvaerner is selling the recycling and dewatering division of its pulp and paper unit for 50m kroner. The group said Vienna-listed Voith Paper had agreed to buy the subsidiary and that the two were considering further cooperation. Kvaerner said the sale would give it 'a small profit'.