EC Gives Green Light to Uljanik’s Rescue Aid
- Business & Finance
The European Commission has granted approval to Croatian plans to grant Uljanik shipyard a state guarantee for a EUR 96 million (USD 115.6 million) loan.
The loan, aimed at preserving the company’s liquidity and ensuring workers are paid their December wages, is in line with EU State aid rules, the EC said.
Following the announcement, Uljanik unions decided to postpone the announced strike for Tuesday, however, a group of workers is reported to have staged a protest in front of the management building asking for a resignation of the current management.
The workers are disgruntled for not having received their December wages but agreed to hold off their strike plans for 48 hours in order to give time to the management to pay their outsanding wages.
The loan will be provided by Hrvatska poštanska banka (HPB) and/or other domestic or international banks, according to Uljanik.
The measure will enable Uljanik shipyard to pay suppliers and other urgent liabilities over the next months and prevent it from going out of business, while preparing a restructuring plan.
“The Croatian State guarantee will help the Uljanik shipyard to continue operating and maintain 1,800 jobs, while they work out a sound restructuring strategy to ensure its future. (…) The restructuring plan must return the company to long-term viability without continued public support, to preserve jobs in Istria on a sustainable basis,” Commissioner Margrethe Vestager, in charge of competition policy, said.
The company, part of the Uljanik group, has been in financial difficulties for several years due to the adverse effects of the financial crisis on the shipbuilding sector in general, and on the resulting low orders for new vessels in particular.
The commission said that an independent auditor will monitor the company’s liquidity needs over the next months on the basis of weekly liquidity plans. Finally, Croatia committed to notify a restructuring plan for the company within a maximum of six months.
“The commission therefore concluded that the measure will help preserving jobs in the region of Adriatic Croatia, where unemployment is significantly higher than the EU average. At the same time, the strict conditions attached to the use of the funds procured through the state guarantee and the short duration of the measure will reduce the distortion of competition potentially triggered by the state support to a minimum,” the EC said in a statement.
Until now, two companies, Kermas Energija and Palumbo Group, expressed their interest in joining Uljanik’s ownership structure.
The restructuring program is expected to result in workforce cuts, but at this point, there have been no estimates on the potential number of layoffs.
President of Uljanik Gianni Rossanda said that over EUR 450 million (USD 551.5 million) is needed for the shipbuilder’s financial restructuring. Rossanda explained that this amount would be directed toward covering of outstanding debts as well as diversification costs, which would include the construction of an infrastructural facility intended for new services- most probably ship repair.
As part of its restructuring, the shipbuilder plans to reduce its current output and switch focus on the construction of highly-sophisticated vessels such as hopper dredgers and luxury cruise ships which have an added value.
Image Courtesy: Uljanik Group