It said that the loans from VTB, a bank owned by the Russian state, could not be drawn in full because of sanctions imposed on Russian banks following the Russian military invasion of Ukraine.
“That is why the financing of Brodosplit’s two largest projects has been halted, and DIV has financially helped Brodosplit so that these projects would not stop,” DIV said.
“We have invested €60 million of our own funds in the two projects, instead of 30 million as planned, and that has financially exhausted us. This lack of financing and our public announcement of the problem of force majeure prompted some of our suppliers to request payment of their claims, both due and not due, which has resulted in the blockade of the accounts of the DIV Group and Brodosplit,” DIV told Hina.
It added that the group’s total debt to external suppliers amounted to “about three weeks’ worth of their turnover”, but that this force majeure problem has been going on for eight weeks now and they lack financing.
“Unfortunately, what we feared might happen has happened. DIV is a large and strong company with a large profit and large capital, so this force majeure that occurred will not much affect our operation,” the group said.
Brodosplit said two weeks ago its access to €60 million had been blocked because it was financing the construction of two vessels with money from VTB Europe, a Russian-owned bank based in Frankfurt.
Asked what steps they were taking to have the blockade lifted and about talks with the Croatian Bank for Reconstruction and Development (HBOR) to secure a loan for Brodosplit, DIV said that they were “in intense communication” with the HBOR. “In case of a quick and positive outcome, Brodosplit would finish the ships in time, pay back the loans and the state guarantee, everyone would make a profit, and jobs would be preserved in this important export sector.”
Only part of the VTB loans drawn
The group also commented on Finance Minister Zdravko Marić’s statement on Thursday that it was not clear how the VTB loans could have affected Brodosplit’s liquidity and how the sanctions against Russia could have had such an adverse effect on Brodosplit.
“The loans have been mainly used… one of the two ships concerned has even been completed,” he said.
DIV said Marić was right that one ship was practically completed and the other nearing completion, adding that “about €500,000 is needed for the first one and about €8 million for the second.”
DIV said the minister was partly right that that loans had mainly been paid out, adding that this is the key problem at the moment.
The two projects cost €150 million and Brodosplit planned to invest €30 million in them, DIV said, adding that the remaining €120 million had to be borrowed from VTB, of which €82 million has been paid out.
Since another €8.5 million is needed to complete the ships, Brodosplit invested an additional €29.5 million in the project for a total of €59.5 million, DIV said, adding that the restrictions imposed on VTB due to the war in Ukraine prevented the payment of the remaining €38 million.
As a result, Brodosplit and DIV had to spend an additional €29.5 million besides the €30 million already invested in the project, DIV said.
The fact that the ships are nearly finished is a strong argument for approving a loan, because the return risk is minimal, it said, adding that Brodosplit is not asking for aid but a commercial loan to finish the ships.
DIV said it was true that Brodosplit had been restructured with HRK 1.5 billion, approved by the government and the European Commission to cover its losses, and that DIV committed to covering HRK 140 million of the losses over five years.
Until 2010, Brodosplit had cost the state HRK 20 billion, while costing it nothing over the past ten years, since DIV acquired it, DIV said, adding that DIV and Brodosplit have paid HRK 3 billion into the state budget, HRK 3 billion to workers for wages and HRK 9 billion to suppliers.
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