EC insists on restructuring or liquidation of Uljanik shipyard: Bankruptcy not an option

Unless Uljanik shipyard repays EUR 96 million for urgency rehabilitation loan it raised from OTP Splitska banka and HPB at the start of the year, bankruptcy will not be an option if restructuring fails - the shipyard in Pula will have to be liquidated.

This is what Uljanik management revealed to union representatives yesterday, noted Adriatic Union (JS) president Boris Cerovac. He pointed out that this is stipulated in the European Commission's approval of the loan from the start of the year.

Increased stakes

Since Uljanik shipyard did not repay that loan and the State paid the first EUR 48 million to OTP Splitska banka for guarantees, it is clear that the company will have to go under unless restructuring succeeds. The Government did not mention this stipulation publicly thus far and it has become clear that bankruptcy followed by restructuring is no longer an option. Unlike Uljanik, 3. maj shipyard can go bankrupt and be restructured according to available information as the shipyard did not formally raise the loan.

Economy Minister Darko Horvat remained steadfast this time in his announcement that the Government will not take part in payment of wages in Uljanik grupa, worth some HRK 45 million per month, as the deadline for paying wages expired yesterday. Not only did he not blink in this economic-social poker game, but he confirmed in an interview with HRT yesterday morning that he increased the threshold for entrepreneur Danko Končar and his company Kermas Energija for entering Uljanik ownership from HRK 200 million to EUR 200 million.

It remains to be seen whether the Government and Minister Horvat will remain as collected after the Main Assembly meeting, slated for Wednesday, as well as whether he will remain true to the position that he will not take part in unfreezing the account of 3. maj, which will go bankrupt on 23 October unless the shipyard comes up with HRK 35 million. Horvat remains resolute: the State can enter Uljanik shipyard with its stake only after restructuring plan is approved by the European Commission, while Končar or a different strategic partner can become majority owner of Uljanik if they invest EUR 200 million in cash. Horvat stressed that Shareholders' Assembly would have to approve this change of recapitalization plan for Uljanik.

Boris Cerovac revealed that he expects the Shareholders' Assembly to appoint a new Supervisory Board at the meeting this Tuesday, adding that the new SB should appoint new management. "However, if that does not happen, Uljanik grupa will have to go under unless it finds a new strategic partner or receives urgent Government aid. Somebody has to provide the money for paying wages and continuation of production immediately or it is all over.

Uljanik management revealed on Tuesday that representatives of the Economy Ministry noted Ukrainian investor Vadym Novynskyi could provide money for wages and continuation of operation before the restructuring program is prepared, but stressed that it does not have confirmation of this. Nonetheless, an urgent financial injection is required because, if the Government opts for the scenario where it pays three minimum wages, it has to be aware that it will lose workers and production in ten days as everyone will flee the company," said Cerovac.

Orders

The situation in Uljanik grupa has come to its negative climax and it appears that the shipyards will go bankrupt (3. maj) or be liquidated (Uljanik). In the meantime, Uljanik reported that it terminated the contract for construction of a livestock carrier for Wellard Ships as the client is not fulfilling its contractual obligations. This means that the number of ships in the order book dropped from 17 to seven, and it is becoming increasingly likely that taxpayers will have to pay State guarantees worth EUR 300 million by the end of the year.