More than two months into the receivership of UK shipbuilder Cammell Laird, initial hopes of a swift spring sale appear to be heading into a long summer of attrition.
There are now at least eight potential bidders left out of 32 initial expressions of interest for the UK group which were lodged with accountancy firm and receiver PricewaterhouseCoopers after its pre-Easter appointment.
Cammell Laird’s insolvency in April stemmed from the withdrawal five months earlier of Italian cruise ship operator Costa Crociere from a £34m luxury liner lengthening contract, which had been clinched on pay-on-delivery conditions. In addition, Cammell faces an impending default on the first £4.5m payment on an expensive £76m bond issue it launched last autumn to fund expansion plans.
Among the potential buyers circling the collapsed UK group are UK shipyard rivals A&P, Swan Hunter, Appledore and naval shipbuilder Vosper Thornycroft, management buy-out teams, venture capitalists Alchemy and rival Patron, and Australian aluminium ferry manufacturer Wavemaster.
Unfortunately for the receiver, as weeks become months a quick sale at a high price for operational yards at Birkenhead, Tyneside and Teesside looks unlikely. The sell-off is turning into a wait and see game among bidders for the first price to be declared openly.
Another 100 redundancies were announced at Cammell Laird on Wednesday, taking the total job losses to 350.
Work runs out at the end of this month for 547 shipyard workers in Birkenhead with the completion of a £10m MoD contract to convert the RFA Argus helicopter carrier into a hospital ship.
A further 573 workers at Tyneside have a week of work left before finishing the CSO Constructor. Last Friday they completed a Norwegian ferry. The Teesside facility has been mothballed with a rump of 35 staff.
Last week, hope of future contracts to keep the yards’ sale prices buoyant emerged when receiver Ian Stokoe and UK shipyard group A&P made a joint bid to the MoD for £8m repair work on three Royal Fleet Auxiliary vessels.
The deal would bring A&P an estimated £4m Grey Rover fleet oil tanker repair contract, while Cammell Laird would land two contracts, each worth about £2m, to repair the logistic ships Sir Tristram and Sir Percivale.
An announcement is expected on 11 June. But even if the bid succeeds, there would be only two future contracts across three yards. These are tough times and the receiver still remains choosy.
Last week PricewaterhouseCoopers rejected the only concrete offer yet for any part of the group. It came from Eric Welch, the former managing director of Tyne Tees Dockyard, which was taken over in 1998 by Cammell Laird. The bid for the Teesside yard was deemed too low.
Welch has hit back, insisting that any increased price for the River Tees facility would have to come with the guarantee of one of the two fleet auxiliary repair jobs earmarked for the group’s two main yards.
However the receiver responds, Teesside is likely to become a secondary issue to the sale of the Birkenhead and Hebburn yards over the summer months.Industry insiders tip a joint carve-up by A&P and Tyneside-based shipyard Swan Hunter as the most likely and attractive package for the receiver, the unions and the government.
Jaap Kroese, the owner of Swan Hunter, has said he wants to add the Hebburn facility to his north-east offshore business.
The Dutch multi-millionaire, who bought Swan Hunter out of receivership in 1994, has dropped previous plans to buy the whole group and then lease Birkenhead and Teesside, after the loss of undisclosed European financial backers.
A&P directors are known to be interested in adding Birkenhead to their ship repair sites at Southampton, Chatham, Falmouth, Dover and Tyneside.
The government and unions are bitterly opposed to receivers dealing with Jon Moulton’s Alchemy, the venture capital house that narrowly failed to take over Rover last year.
Separate management buyout teams for the Birkenhead and the Tyneside yards, as well as for the whole UK group, need finance. Negotiations are believed to have taken place with the controversial Alchemy.
John Stafford, who resigned as Cammell’s chief executive in January, has already led a management takeover of the Gibraltar yard with private money.
Negotiations are under way to sell Marseilles’ largest repairer, Compagnie Marseillaise de Reparations, acquired by Cammell last year along with a 20-year lease on three docks, and the group’s 49% share in Cascade General, the Portland, Oregon-based ship repairer.
Unions now fear that interested parties are waiting to push for a knock-down price and for further job losses so that they will not have to face any sizeable redundancy costs.
It is set to be a long summer for Cammell Laird’s receiver. Even so it probably won’t be as long as for accountancy firm KPMG. It has been appointed as administrator to sell off the Costa Classica mid-section rusting in Birkenhead and pursue Italian owner Costa Crociere through Italian courts for up to £42m.