It’s not over yet

Cammell Laird, the Merseyside shipbuilder, is not yet sunk.

Stricken shipyard Cammell Laird has received a stay of execution.

The Ministry of Defence (MoD) told receivers PricewaterhouseCoopers (PwC) they would pay for work already completed and allow Cammell Laird to see out its unfinished contracts.

The news means the shipyard has several months breathing space in which to find a buyer. A spokeswoman for PwC said PwC was “in active talks with three or four interested parties and are cautiously optimistic of a sale”.

Meanwhile Alchemy, the venture capitalist, has denied reports it is interested in bidding for Cammell Laird. The investor was widely reported as saying it was “too late to do anything”.

But, according to a source close to the venture capitalist, Alchemy might yet consider a bid for the shipbuilder when it is in possession of more information about the company.

The source said that Alchemy had been approached by investors interested in a deal and also by Close Brothers, the investment bank appointed to advise Cammell Laird, but that no decision had yet been taken.

The company’s problems began when a £51m contract to work on a cruise liner belonging to Italian cruise operator Costa Crociere was terminated after the shipbuilder had spent £40m. It then failed to land a £348m contract for American cruise operator Luxus and slid into receivership.

Adding to its difficulties, Cammell Laird has today been downgraded by ratings agency Standard & Poor’s as a result. Its long-term corporate and senior unsecured debt ratings fell to D from double-C and single-C respectively. The company’s failure today to make the first coupon payment of £4.6m on its £77.3m 10-year bond also contributed to the downgrade.

Nevertheless, PwC says the company still has prospects. “It has unfinished MoD contracts as well as work that is due and payable,” said the spokeswoman. “It is also hoping to secure new contracts that will make it a more attractive proposition to a potential buyer.” However, PwC is reportedly finding it difficult to secure new MoD contracts.

The shipbuilder had revenues of £129m in the year ending October 31 2000. Juan Kelly, Cammell Laird's chairman, has expressed willingness to take part in a management buyout.