Rijeka Investment as Viktor Lenac Shipyard Injects 40 Million Euros

Lauren Simmonds

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As Novac/Jozo Vrdoljak writes, the management of the Rijeka-based Viktor Lenac shipyard is preparing a serious Rijeka investment with an estimated value of around 35 million euros. Such an amount would be invested in the project of the reconstruction and upgrade of part of the floating dock to its Suezmax size, with whicn the existing Dock 11 would be replaced, the most significant dock in this overhaul shipyard.

The goal of replacing the existing Dock 11, with which Viktor Lenac generates about a third of its revenue, with a new floating dock is to better adapt to current market needs, meet energy efficiency requirements, protect the environment and reduce operating costs of the dock’s management in general. The deadline for the completion of the dock and its commissioning is scheduled for the first quarter of 2023.

The new dock, which will be slightly longer and wider than the existing Dock 11, represents the capacity to accommodate ships up to Suezmax size. These are not complete investments because they are also expected in the arrangement of one shore connection, which, together with regular annual investments in production equipment in the next two to three years, will reach a value of about 40 million euros. Viktor Lenac plans to secure this amount with a long-term loan from HBOR and commercial banks in the amount of 28 million euros, with a target repayment period of 15 years, and the remaining 12 million euros would be secured by its own contribution from EBITDA and sale of the current Dock 11 in scrap iron.

If this Rijeka investment successfully comes to fruition, a section weighing around 9,000 tonnes would be ordered from Croatian shipyards, and the final connection would be done by Viktor Lenac’s own workers, as was revealed by the president of the Viktor Lenac shipyard’s management, Sandra Uzelac. She added that this Rijeka investment project would have the status of a dock in construction, which is considered to be new construction in the shipbuilding segment.

“This investment would enable us to enter a new market niche for certain types of ships that the shipyard hasn’t been able to receive in its docks so far. Primarily this refers to the segment of LNG ships, which will come to the nearby LNG terminal in Omisalj, as well as the Port of Rijeka and other cargo ship traffic in the vicinity of Viktor Lenac, which will not be significantly larger than what we had before, but will open up the space for the overhaul and docking of ships coming to the LNG terminal and Rijeka, as well as ships of other clients which are a bit heavier and require a higher lifting capacity of the dock.

This would certainly be a nice story if this Rijeka investment is realised, and we believe we will complete it because we’re including Croatian shipyards in the project, and providing ourselves with new and greater opportunities. We aren’t worried about the price of steel at the moment and we’re still doing calculations in order to get to the real budget we need for this investment with the help of HBOR and commercial banks,” explained Sandra Uzelac.

The renovation of Dock 5

Last year, Viktor Lenac had investments worth a total of 30.4 million kuna, of which the largest amount was invested in the reconstruction of its docks. The biggest investment was in the renovation of Dock 5, which also needed to be done for a new five-year class certificate.

In 2020, Viktor Lenac implemented 70 different overhaul projects, five of which began at the end of the year and continued throughout January 2021. Of the total 70 projects, five were related to projects contracted with no less than the US Navy. At the beginning of 2020, the work on the Bruce C. Heezen and on the Yuma ships was completed. At the height of the pandemic here in Europe, Trenton was located at the Viktor Lenac shipyard, where work was nearing completion at the time, and the arrival of Carson City was postponed from March to April due to compliance with the ship’s fourteen-day quarantine period. Back in December 2020, overhaul work began on the Yuma ship.

Uzelac says that the Viktor Lenac shipyard achieved good business results even in such difficult circumstances.

“Our cooperation with US Navy is stable, but we can’t count solely on that. These are stable and excellent revenues, but we also have to generate revenues from the overhaul of merchant ships. In the overhaul business it is common to not contract jobs several months in advance, so it’s difficult to predict employment and market movements. It’s difficult to know what could happen. That continues to be the case especially now, with the consequences of the coronavirus pandemic on the global economy. However, some analysts predict that the overhaul market could be among the first to recover,” Uzelac concluded.

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