CONSTRUCTION and engineering group Kvaerner, which employs more than 1,000 on Teesside, has revealed more details about its financial state.

The Norwegian group is locked in crisis talks to save it from bankruptcy, after its debts rose to more than £750m.

The group has already failed to gain backing from shareholders for a rights issue aimed at raising more than £200m to stave off bankruptcy.

It has come under intense pressure after banks last week demanded the company raises capital before agreeing to further long-term financing.

But the dire financial situation of the company is believed to have put off existing shareholders from investing in the rights issue.

Kvaerner yesterday revealed that debts at the group amounted to 9.5 billion kroner (£760m).

Its woes date back to the early 1990s when it embarked on a rapid expansion from its traditional North Sea oil and gas engineering business into shipbuilding and property.

The problems are believed to stem from a £900m takeover of British conglomerate Trafalgar House in 1996.

That transaction included Cunard Lines and engineering firms Davy and John Brown, which both have operations on Teesside, but also included Trafalgar's huge debts and property interests. In 1999 it underwent a massive restructuring programme, selling off a number of businesses, including its Darlington-based Cleveland Bridge operations, cutting staff numbers from more than 80,000 to just 35,000, located in more than 35 countries around the world.

But it has failed to recover fully, and has recently seen its international shipbuilding operations hit by the terrorist attacks in the US.

Kvaerner issued a statement yesterday saying its board continued its work to establish a rights issue of up to 2bn Norwegian kroner (£159m).