Economy Minister Darko Horvat appeared on N1 television's morning programme Novi Dan on Tuesday to comment on the state of affairs at the troubled Uljanik Group shipbuilding company.
All eyes are now on Uljanik Group, which owns the indebted shipyards Uljanik at the city of Pula and 3. Maj based in Rijeka. Is there any new information about them at this moment, and is any of the three scenarios for them mentioned earlier by Prime Minister Plenkovic becoming closer to reality?
“According to the European Commission, the government cannot over-commit in saving either the Uljanik shipyard or the entire Uljanik Group. At the moment, we are actively talking and seeking a real strategic partner, one who would want to continue building ships and ensure the survival of shipbuilding in both Pula and Rijeka.”
Is there such a strategic partner at this moment?
“We thought there was one, after Uljanik’s management, with its supervisory board’s approval, had selected one. However, at this moment, without a right financial investment that would cover the huge losses generated over the last two years in the entire Uljanik Group, and after that in the shipyard itself, we aren’t certain right now that Koncar can finance the restructuring plan the was it was envisioned.
That’s why the plan included measures to add a real estate business and the diversification of the company’s businesses – to allow Koncar some financial ability to try and re-vitalise shipbuilding at Pula and Rijeka shipyards. But these things take a long time, and the local authorities themselves has doubts whether they want shipbuilding or some other activities in that area. Until we get a real agreement, synergy, and an uncompromising attitude what we want in those two spaces, we will continue to live in the discussion phase.”
Is there another strategic partner apart from Koncar which could seriously come into play and negotiate about the fate of shipyards?
“At this moment, the Economy Ministry is aware of three or four initiatives for ways to invest in shipbuilding at Pula and at Rijeka. Colleagues from the Netherlands, South Korea, China, and Germany have shown interest to do so. But the ways they propose this are different from what was set out in the existing restructuring plan.”
Company management said that a decision must be made about the fate of shipyards within a month.
“It’s hard for me to comment on such explicitly defined deadlines because talks anmd negotiations we have had so far never had any deadlines. If you want to find a real partner, you must give them a chance to to perform due diligence on the internal processes at the shipyard, as no serious strategic partner would blindly go into an investment regardless how large it is. Setting conditions, saying something must happen within a month, is not business-like, because we – the government – had ensured a loan in January which kept the shipyards afloat for eight months. We’ll see what happens in the next month or so, we’ll see. But (nothing will happen) without the right decisions which would not change according to whatever local politics requires – we need a sincere intention for all the stakeholders to sit at the same table and reach consensus… These include unions, Uljanik Group management, local government, and the central government…”
Is one of the solutions bankruptcy, and what would that mean for shipbuilding in Pula and in Rijeka?
“I’m the last person to be in favour of bakruptcy. But if some things don’t get solved, bankruptcy will come anyway, and it is one of the insolvency procedures that could be applied to the Uljanik Group. I wish to make it clear… that Uljanik shipyard os the only shipyard left which has any legitimacy to ask for a (government-assisted) restructuring plan. All others – including 3. Maj – have completed their restructuring phase on December 31, 2017, and in the next ten years the government has no options to get involved, without breaking European Commission’s market competition rules.
At this moment, I am not in favour of any model that would out strain on our communication with the European Commission, but that doesn’t mean we aren’t negotiating and talking with them. The restructuring of Uljanik is not the only thing going on at this moment, we are also following what’s going on at (fertiliser producer) Petrokemija, (engineering group) Djuro Djakovic, and (shoe manufacturer) Borovo, and I wouldn’t want making any careless moves in communicating with our colleagues at the European Commission… as it might close the door to the government for any future communication on other restructuring processes, which are ongoing and which are going towards their conclusion successfully…”
Is the government feeling the pressure of October 15, when September salaries are due to be paid to dock workers? What if they go on strike again and take to the streets? All eyes will be on the government again, and a solution will be sought.
“We now have two ways to help the restructuring – we can either – and against EC’s recommendations – choose to continue to fund salaries at the shipyard, or we can get involved in finding a partner which will continue with shipbuilding at these shipyards at least in part, or we will at some point have to admit that there is no solution to be found, which means bankruptcy or some other insolvency procedure will ensue. Outside those three scenarios nothing else can happen. The government cannot and must not finance salaries for September at this moment.”
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