The European Commission has no objections to the government and the investor participating 50:50 in the interim financing of the Pula-based Uljanik shipbuilding group, until a restructuring programme is drawn up, Croatian Economy Minister Darko Horvat said on Monday.
“The European Commission does not explicitly ban interim financing but still insists that it be 50:50. This interim financing would be part of the restructuring plan and will be part of the total volume once the plan is adopted,” Horvat told Croatian reporters after a three-hour meeting with the European Commission.
The meeting in Brussels was also attended by Tomislav Debeljak, the owner of the Split-based Brodosplit dock, which Uljanik’s management had selected as the group’s “strategic partner” earlier in February.
Brodosplit, who partnered up with Italy’s major shipyard Fincantieri, is now expected to acquire a stake in Uljanik and take part in financing its restructuring programme to stave off its bankruptcy. The bids submitted for Uljanik earlier this month were never publicly released.
According to Horvat’s estimates, some 600 million kuna (€81 million) total is necessary to revive the two indebted docks owned by the Uljanik Group – Pula-based Uljanik and Rijeka-based 3. Maj.
The sum would include some 107 million kuna (€14.4 million) to unblock the account of 3.Maj, and some 65-68 million kuna (€8.7-9 million) to unblock the account of Uljanik – both of which were blocked due to unpaid suppliers – about 300 million kuna (€40.4 million) to complete the four ships currently under construction, and about 100 million kuna (€13.5 million) to pay three overdue salaries to the docks’ workers, who, with a 47 percent stake, are also shareholders in the company.
On Sunday, a meeting was held with Luxembourg’s JDN group, which had previously commissioned one of the ships to be build at Uljanik, for which the government issued a €124 million guarantee. At the end of January, the group cancelled its contract with Uljanik because the dock could not deliver the ship as agreed. About €30 million is necessary to finish the ship, and if it is finished, the state guarantee would not be enforced.
Horvat said on Monday that, after the meeting, JDN decided the ship would stay at the Uljanik dock in Puly to be finished, and a memorandum of understanding would be hammered out over the next three weeks with the Luxembourg company. Under the memorandum, JDN would provide €8 million, while the Uljanik Group, its investor and the government would put forward €22 million.
Asked if the government could take part in the financing without the European Commission’s permission, he said he was told at today’s meeting that “any damage reduction would be considered a positive effort made by the Croatian government”.
“We have no other option but to come up with a financing model together with the client,” he added.
“We realise now that the European Commission will not have a rigorous position, that Croatia, if it can, has the right to reduce the damage to the national budget. We know how much it would come up to if we did nothing. It’s very pragmatic and justified business-wise to invest 120 or 130 million kuna (€16-17.5 million), if it means we salvage 970 million kuna (€130 million),” said Horvat.
As for an overhaul programme, which Uljanik’s management must come up with together with the investor, he said it would be ready in about a month, after which the Commission would need three to five months to analyse it.
