Kvaerner shares suspended

Almskog will leave the chief executive post by year end

The trading of shares in the Anglo-Norwegian engineering and construction group Kvaerner was suspended early on Monday morning, amidst speculation that the company may be forced to declare bankruptcy.

The move by the Oslo Stock Exchange to suspend the shares, pending an announcement by Kvaerner later during the day, followed a weekend of crisis talks between the company and its shareholders, several banks and brokers and the Norwegian government.

By early afternoon, the talks had failed to clear a way out of Kvaerner's financial difficulties, though talks were continuing.

"We are continuing our work. I don't know for how long," chairman Harald Arnkvaern said early on Monday morning.

Cash crunch

The crisis talks were held following a disastrous week which saw the company's chief executive Kjell Almskog resign as the company's share price crashed following a sudden financial crunch.

On Thursday, the company's share price fell to a record low of five Norwegian kroner ($0.58, £0.40), before climbing back to 8.8 kroner by Friday's market close. In May, the stock was trading at 75.8 kroner.

Last week, Kvaerner said it wanted to borrow two billion Norwegian kroner ($231m, £158m), but it failed to convince its investors to underwrite such a loan.

At 0910 GMT, Paul Emberley, the company's spokesman in London, told BBC News Online that efforts to put together a consortium of guarantors are continuing.

Bankruptcy is not the only alternative if these efforts were to fail, he stressed.

Shortly before 1100 GMT, Norwegian radio reported that the Norwegian government seemed willing to step in as a guarantor of the loan.

Trafalgar House

Kvaerner bought its UK competitor Trafalgar House in the mid-1990s, instantly doubling the size of the company.

The expensive restructuring that followed quickly begun to eat into the company's cash reserves, resulting in the resignation of former chief executive Erik Tonset, the man spearheading the take-over.

Kvaerner employs 35,000 people.