ZAGREB, July 18, 2018 – After meeting with shop stewards at the Uljanik and “3. Maj” shipyards on Wednesday, Minister of Economy, Entrepreneurship and Crafts Darko Horvat said that another strategic partner was possible for the restructuring of the Uljanik Group and requested the European Commission to verify the model for the group’s restructuring.
Horvat underscored that the restructuring model for the Uljanik docks was sent to Brussels earlier in the day. This relieves the pressure to repay a loan Uljanik was given in January on the condition it submitted a model for its restructuring by July 22, said the minister.
He assured workers and unionists that there was no need for fear as the model sent to the EC was not necessarily the final one and that the final model would be prepared after several rounds of negotiations. Only when it is certain that the model is acceptable to the EC will the model be formally submitted, Horvat explained.
He added that he would request the EC to suggest what was not acceptable in the proposed model and that in the meantime efforts would be made to secure liquidity. Once the platform and the ship that are being built by Uljanik are finished, it should provide additional breathing space for the shipyard, he said.
Horvat went on to say that it would be necessary to secure the survival of the group’s core business, but that there were no guarantees as to what would be happening in the next few years, as of the moment “the strategic partner approved by the group’s general assembly and management joins in the Uljanik group’s concept.”
“At the moment the assembly has a valid decision of who the strategic partner is. As for whether that same strategic partner will launch the restructuring process – at the moment changes are possible, it is also possible to choose another strategic partner, but what we are asking of the European Commission is to verify the model,” Horvat said.
Horvat added that the government’s primary aim was for the shipbuilding group’s core business to continue.
The minister reiterated that, according to the current decision, the Končar Group was the strategic partner but he added that it was yet to be seen whether Končar would enter into the restructuring phase under amended conditions.
Horvat said that a rough estimate existed of the funds required to finance the book of orders that contained quite a few ships and that the group was applying for a loan from the Croatian Bank for Reconstruction and Development (HBOR) to ensure liquidity.
He added this was the last chance for the state to intervene and salvage the shipbuilding industry, which accounts for a significant share of Croatia’s exports. “Shipbuilding, as the last trace of industry in Croatia, is in the government’s strategic interest but ‘3. Maj’ and Uljanik can no longer operate on orders that generate losses but rather on orders that will keep them afloat,” Horvat added.
Asked about the responsibility of the shipbuilding group’s management for the current situation, Horvat said that someone should feel responsible. Asked whether there was any danger of state guarantees being activated, Horvat said that he believed that that would not be necessary and that everything was being done to meet obligations towards suppliers and clients. He added that there were two projects that were nearing completion and that could secure working capital.
Union representative Đino Šverko said that they were encouraged with what they heard at today’s meeting with the minister regarding the restructuring process and that it was everyone’s priority for the Rijeka-based ‘3. Maj’ and the Pula-based Uljanik to maintain the shipbuilding business. He added that the issue of preserving jobs wasn’t discussed at today’s meeting but that unions would be in touch with the government regarding the matter.
The government in January issued a state guarantee in the amount of 96 million euro in favour of Croatian Postal Bank (Hrvatska Poštanska Banka) and/or some other commercial banks in the country and/or abroad for a credit commitment of the Uljanik shipyard for the implementation of a restructuring process as well as financial consolidation of the company.
On 22 January, the EC cleared rescue aid for the shipyard. “The European Commission has found Croatian plans to grant Uljanik shipyard a state guarantee for a 96 million euro loan are in line with EU state aid rules. The measure will allow the company to meet urgent liquidity needs while preparing a restructuring plan, whilst competition distortions are limited,” a press release said then.
In late March, Uljanik’s management and supervisory boards chose Kermas Energija owned by Danko Končar as the strategic partner for the dock’s recapitalisation.