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Aker Kvaerner Group

The Aker Kvaerner Group

The fight against bankruptcy

Executive summery

During 1996, Kvaerner sought to strengthen its engineering base internationally through the acquisition of the UK-

based conglomerate, Trafalgar House. The acquisition was completed in May 1996. Kvaerner became an

international player in shipbuilding, oil and gas, pulp and paper and engineering and construction. It moved its

international headquarters to London in the spring of 1996.

In the following years, increasing financial and operational difficulties followed strong growth financed through

debt. The acquisitions had resulted in a broad business portfolio, without a corresponding management capacity. The

consequences were weak integration of the acquired units and no realization of synergies between the different

business areas.

In 1999 the company initiated a major sell-off, focusing on realizing capital through divestments. These efforts did

not solve the mounting financial and operational challenges, which eventually brought the company into an acute

liquidity crisis in August 2001.

In July 2000, Aker Maritime ASA, a Norway-based offshore products, technology and services provider, had bought

26 per cent of the shares in Kvaerner ASA. The investment was made with the aim of creating a focused, profitable

and forward-looking group based in Norway, with substantial international operations.

It took 18 months to achieve the goal of integrating these businesses. In late November 2001 an agreement was

reached between Aker Maritime ASA and Kvaerner ASA. Aker Maritime injected NOK 2.8 bn in net assets, raised

another NOK 3.5 bn through two direct issues and renegotiated NOK 8.6 bn of Kvaerner's debt.

The result was a financially stronger Kvaerner, with four focused business areas: Oil & Gas, Engineering &

Construction, Pulp & Paper and Shipbuilding. The group decided to adopt the Aker Kvaerner brand for the entire

group. But in 2002 Aker Kvaerner still had a huge liquidity problem, so the company kept selling asset to earn

revenues. But in the end of 2002 came the message: Aker Kvaerner had again a liquidity cries.

To day Aker Kvaerner don’t know how their are going to pay their workers salary the coming month, and their

struggling every day to avoid bankruptcy.

Introduction

The Aker Kvaerner Group

Aker Kvaerner is a world-class international oil services and products, engineering and

construction, and shipbuilding Group with the capability and resources to undertake the

world's most challenging projects.

Today's Aker Kvaerner is an industrial technology provider. It meets the needs of its

customers by adding value to their business - through the provision of innovative, cost-

effective solutions - for challenges in the hydrocarbons, process, and maritime industries.

The Group's activities are organised in four core business areas:

• Oil & Gas

• E&C

• Pulp & Paper

• Shipbuilding

The Group has annual revenues in excess of US$6 billion, with some 34,000 permanent

staff located in more than 30 countries throughout Europe, Africa, Asia and the

Americas.

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