Vard clinches contract to build 3 Norwegian coast guard vessels for over 5b kroner

SHIPBUILDER Vard Holdings has clinched a contract to build three coast guard vessels for the Norwegian Defence Materiel Agency (NDMA) for more than 5 billion Norwegian kroner (S$839 million), it announced on Monday afternoon.

The Norwegian Government had originally announced plans for the construction of the three vessels in September 2016. Following a review of offers from three competing yards, Vard Langsten was selected to continue negotiations in October 2017. The investments were approved by the Norwegian Parliament in the beginning of June 2018, with final negotiations complete in the following weeks.

The new tailor-made vessels, which will replace the current Nordkapp-class coast guard ships, will be developed for worldwide operations in all weather and sea conditions, both inshore and offshore. Specially designed to withstand operations in demanding arctic areas, they will have ice-strengthened hull and iceclass notation.

With a length of 136 metres and a beam of 22 metres, the vessels feature strong ocean-going capacities for long-distance transits, search-and-rescue operations, surveillance, and oil recovery, said Vard.

NDMA Director General, Ms Mette Sorfonden, said: "Due to national security interests, the Norwegian Government decided that the competition should be restricted to Norwegian yards only. Vard Group with its Vard Langsten yard was the provider that overall satisfied the defined requirements for solution and the Navy and the Coast Guard's needs in the best manner."

Deliveries of the three vessels are scheduled from Vard Langsten in Norway in the first quarters of 2022, 2023 and 2024 respectively. The hulls will be built at Vard Tulcea in Romania.

Vard said that "the effectiveness of the contract is subject to certain conditions being lifted." It did not elaborate on what those condiitons are.

The contract is not expected to have any material impact on the earnings per share or the net tangible assets per share of the company for the current financial year, it added.

Shares of Vard, the target of a takeover by Italy's Fincantieri, were trading unchanged at 25 Singapore cents as of 4:20pm.

Fincantieri, which has amassed a more than 80 per cent stake in Vard, has made an offer to buy the remaining shares at 25 Singapore cents apiece and take the company private.

Over the weekend, Vard announced it will delay an extraordinary general meeting on its proposed delisting, as the updated delisting circular is still being reviewed by bourse regulators.