THE CANADIAN PRESS -- QUEBEC - Quebec's Davie Yards dodged another financial torpedo on Thursday after a judge approved a deal to sell the shipbuilder to Ontario's Upper Lakes Group.
The shipbuilder, which is based near Quebec City, has been in creditor protection since February 2010.
Negotiations to keep the company afloat extended well into Wednesday evening before Justice Etienne Parent delivered his ruling Thursday.
Gustav Johan Nydal, Davie's president, praised the outcome and thanked the Quebec government for its help in the restructuring.
"We have deployed tremendous efforts to close a deal under enormous pressure and we are happy that we have been able to sell the yard to a credible buyer, who together with its partners can ensure a viable future for the yard," Nydal said.
"This is good news for our workers and for Quebec since an active yard will ensure significant employment."
The new owners also announced Thursday they have submitted a bid to participate in a lucrative federal shipbuilding program worth $35 billion over 20 years.
They were optimistic the shipyard will continue no matter the results of the bid competition.
The company would not have been able to participate in the bidding process if the court approval had not been granted.
There are two major contracts up for grabs, one for $25 billion to build about 20 large combat vessels for the navy, and a second for $8 billion to build the smaller vessels for the coast guard and supply ships.
A further $2 billion will be spent on other small craft and repair contracts.
On Wednesday, two companies -- the Irving-owned Halifax Shipyard and Seaspan Marine Inc. of Vancouver -- confirmed they were submitting bids for the shipbuilding program.
Federal officials said Thursday that those two firms have been accepted as eligible bidders, while a decision on Davie's eligibility is expected to be made within days.
Quebec Economic Development Minister Clement Gignac said he didn't think Davie's near-death experience would allow it to benefit from any favouritism in the bidding.
"Let's be clear, if Davie, as we think, gets part of the $35 billion in contracts for next fall, it will not be charity, it will not be for political reasons, it will be because it will have the most competitive offer that has been submitted," he told a news conference.
The judge noted in his court ruling that Pierre Laporte, an official of the firm Deloitte & Touche who was overseeing the file, had given Upper Lakes' bid his unconditional support.
He also pointed out that Laporte said that under the leadership of Upper Lakes, Davie "will be able to resume its activities, to the benefit of employees, suppliers and other companies that benefit indirectly from the shipyard's activities."
Upper Lakes Group is involved in a consortium with SNC Lavalin (TSX:SNC) and the South Korean firm Dae Woo, but Upper Lakes is the only buyer of all the assets of Davie. The transaction was valued at about $28 million.
Davie had been pressed to quickly find a deal to avoid bankruptcy after negotiations with potential buyer Fincantieri of Italy broke down last week.
Founded in 1825, Davie could recall about 1,000 laid-off employees if it restarts its operations.
Davie employed at least 1,500 workers before it was forced into a mass layoff once it obtained creditor protection. Two maintenance workers are currently employed at the site near Quebec City.