Over USD 550 Mn Needed to Restructure Uljanik

Next week is expected to see key developments take place that will decide the fate of the Croatian shipbuilder Uljanik Group.

Namely, the shipbuilder is waiting for a green light from the European Commission for a state guarantee for a EUR 96 million (USD 115.6 million) loan, aimed at preserving the company’s liquidity and ensuring workers are paid their December wages.

Metalworker unions have already voiced their intentions to stage a strike next week together with other affected unions if their December wages are not paid by then.

Last week the Croatian Government issued the guarantee for the loan in order to help the shipbuilder initiate its restructuring process.

The loan will be provided by Hrvatska poštanska banka (HPB) and/or other domestic or international banks.

Speaking to local media president of Uljanik Gianni Rossanda said that the EC is expected to support the request and that a reply will be provided next week enabling the company to pay the outstanding wages along with meeting the yard’s obligations toward suppliers.

However, as indicated by local unions, the loan is not enough to ensure sustainable operation of the shipbuilder having in mind that the Croatian shipbuilding industry lacks systematic financing. As a result, Uljanik Group will have to resort to restructuring which will most likely include diversification of the company’s business with the help of private capital from third-party investors.

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.

As confirmed by Rossanda, 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.

The issues that led to the need for restructuring started with the downturn of the global shipbuilding industry that left the shipbuilder without work for two years coupled with systematic financing problems and lack of skilled workforce.

World Maritime News Staff