Re Agreement

RNS Number:3768M
Kvaerner ASA
30 October 2001


Long-term solution for Kvaerner

LONDON, 30 OCTOBER 2001: Kvaerner, the international engineering and
construction Group, today announced that the Company, together with Yukos, a
group of Norwegian and international banks, including DnB, Nordea, and Norsk
Tillitsmann on behalf of the Norwegian bond and certificate owners, have
agreed to propose a complete solution for solving Kvaerner's financial
problems.  To this effect, an underwriting consortium of NOK 3 billion has
been established to implement a Rights Offering.  Kvaerner has also entered
into a deal with the lenders to propose a conversion of approximately NOK 4.5
billion in debt, to a subordinate convertible note. Furthermore, it is
presumed that existing loans will be rescheduled to the end of 2004.  The
proposal implies a long-term solution that will re-establish confidence in the
Group - among its customers, sub-contractors, financial institutions, and
employees.

"This is a solution that mirrors the efforts of many parties who have
genuinely wanted to find a long-term solution for Kvaerner," said Harald
Arnkvaern, Chairman of Kvaerner.  "Important shareholders, led by Yukos, have
contributed to this solution which gives us the opportunity to move forward,
develop the Company - and demonstrate to the world that Kvaerner, with its
35,000 employees and unique qualities, is a viable going concern. The
foundations that have now been established should also make it attractive for
investors to participate in the rights offering," he concluded.

The main elements of the agreed plan, are as follows:

-Underwritten Rights Issue of NOK 3 billion.  NOK 3 billion will be raised
through a Rights Issue of ordinary shares, to be approved by shareholders by
the end of November.  The subscription price will be set at the lower of (i)
NOK 10 per share, and (ii) 20 % below the volume weighted average share price
quoted on the Oslo Exchanges during the first 5 trading days following the
date upon which the final prospectus for the Rights Issue has been released to
the market, and rounded downwards to the closest NOK 0.10. The Issue will be
underwritten by Yukos, Folketrygdfondet, Den norske Bank, Odin, Kristian Siem
and lead managers with a total of NOK 2 billion. Additionally, employees of
Kvaerner will collectively participate with NOK 25 million. 

Furthermore, the lenders will collectively participate as underwriters for NOK
1 billion.  If the underwriting of the lenders, or parts of it, is turned into
a subscription of shares, the proceeds will be paid through the conversion of
debt from the lenders - in proportion to their share of the debt.

- Lenders conversion of approximately NOK 4.5 billion of debt to subordinated
convertible note. Lenders, bondholders, and holders of loan certificates will
convert up to approximately NOK 4.5 billion of debt into a redeemable, zero
coupon, ten year subordinated convertible note. To the extent the underwriting
of the lenders will become effective, this will reduce the conversion amount
of approximately NOK 4.5 billion. Note holders will have the right to convert
to shares after 3 and 5 years at the market share price.  This figure will be
determined by the average share price over a forty trading day period - twenty
days before and twenty days after - the note holder has announced its election
to convert, less a discount of 5 per cent. 

Kvaerner will have the right at any time to redeem any or parts of the notes,
which have not already been subject to notification of conversion at any time
at a price equal to par value plus 5 per cent per annum, capitalised annually.

- Three-year exemption from debt repayment.  It is proposed to freeze the
maturity date for all of Kvaerner's remaining loans until the existing debt of
approximately NOK 9 billion has been rescheduled with maturity on 31 December
2004. The interest rate of the long-term loans will be NIBOR/LIBOR, plus a
margin of 1.25 per cent.  Furthermore, it is required that the parties agree
on a three-year business plan.

This solution will remove the uncertainty that has made it difficult for the
Group to access all of its available cash in various subsidiaries. 

In connection with its participation in the underwriting consortium, Yukos has
emphasised that the management and operations of Kvaerner should be conducted
in an appropriate manner and based on sound industrial thinking.  To this
effect, a number of measures have already been implemented.  These include:

- efforts to reduce the cost of financial advisors;
- the establishment of a working group with shareholder representation to
  reduce outstanding claims against the Company.

Furthermore, Kjell E Almskog, President & CEO has waived his right for two
years salary, upon his departure from the Group.

The solution is dependent on acceptance by all lenders, including bondholders
and certificate owners.  Further, the refinancing plan must have support from
a two-thirds majority of the attending shareholders at an Extraordinary
General Meeting of Kvaerner.  The underwriting commitments for the proposed
rights offering are also dependent on fulfilment of the lenders' conditions. 
In its efforts to find the best solution for Kvaerner, the Board of Directors
has also considered concrete proposals from the Company's second largest
shareholder, Aker Maritime.  These proposals implied that the lenders would
have to write-off a considerable part of their loans.  The lenders were not
willing to accept this.  Based upon this conclusion, the Board decided there
was no basis upon which to explore these proposals.


For more information: 

Paul Emberley, Vice President Group Communications: [phone] or 
[phone] or [e-mail]
 
Note to editors:
Kvaerner is a world-class Anglo-Norwegian engineering and construction group.
The Group's activities are organised in two core business areas: E&C
(engineering and construction), and Oil & Gas.  It also has interests in
shipbuilding and the provision of services to the pulping industry.  Kvaerner
is a Norwegian registered business, but has a London, UK-based international
headquarters.  The Group has annual revenues of more than US$6 billion, with
some 35,000 permanent staff located in almost 35 countries throughout Europe,
Africa, Asia and the Americas.