ZAGREB, February 28, 2019 - The government will make a rational decision about the Uljanik shipbuilding group that will be responsible toward its employees, shipbuilding and taxpayers, a decision that will be in accordance with the guidelines for state subsidies to shipbuilding at the European level and realistic agreements with the strategic partner and management, Prime Minister Andrej Plenković said on Wednesday.

"We will make a decision that will be rational, responsible toward shipbuilding, toward employees, responsible toward the tradition that Croatia has in the industrial sense toward shipbuilding, but also responsible toward taxpayers and in accordance with what is realistic, in accordance with the guidelines that exist for state subsidies in the domain of shipbuilding at the European level and realistic agreements with the strategic partner and management," Plenković said responding to reporters on the margins of a meeting with the ambassadors of EU member states on the occasion of Romania taking on the chairmanship of the Council of the European Union.

Asked whether the decision about Uljanik had been made, the prime minister said that serious talks were being held between the Economy Ministry and the Finance Ministry, and that last week consultations were held with the European Commission.

He underscored that a solution was being sought for the ships that are currently being built to reduce the state's exposure due to state guarantees.

The prime minister recalled that the government had the financial strength in December last year and January this year to pay out 2.8 billion kuna in state guarantees for Uljanik. "That shows that we are consolidated and that is why the next steps that concern shipbuilding in general and Uljanik will be taken carefully by the government," he said.

More news about Uljanik and the Croatian shipbuilding industry can be found in the Business section.

ZAGREB, February 27, 2019 - Brodosplit's offer of strategic partnership to the Uljanik shipbuilding group contains all the necessary guarantees, the shipyard said on Tuesday after Economy Minister Darko Horvat said the strategic partner must provide clear guarantees that it was willing to finance Uljanik's restructuring.

"The answers to all the questions, including those asked today, are in our offer which... was accepted because it contains the necessary guarantees for everything we offered," Brodosplit said.

The dock said it had expressed willingness to ensure, with appropriate collateral, in the period until the restructuring programme is approved, part of the funds necessary, to complete the ships under construction, which would relieve the state.

"Not only that. With our professional approach, we opened all the doors in Brussels to a positive restructuring and the payment of the unpaid workers' wages. We did all that voluntarily, just so that we can assist the workers, Croatian shipbuilding and the state," Brodosplit said.

"Our offer, which contains all those answers, is still valid, although its expiration date is near and, as we said in the offer, after the other stakeholders do what is necessary, we are willing to immediately launch and do all that we offered," it added.

More news about the Uljanik shipyard can be found in the Business section.

The NCP Šibenik Shipyard has agreed to build a new vessel model for Norwegian fishers – a hybrid aluminium catamaran. The months-long negotiations have been completed and the contract was signed for the construction of the new type of ship for the Norwegian mariculture market, reports Jutarnji List on February 21, 2019.

“Given the entry of a Slovenian investor into the ownership of the NCP shipyard, CroNoMar hopes for further successful cooperation. We have met the new owners and we are looking forward to increasing production for international markets,” says Ana Zajc, senior project advisor at CroNoMar, adding that it is very important for these projects as well as for all the partners involved that the situation in the shipyard is stabilized.

The ship in question is a 13.75-metre-long aluminium catamaran. This model has a significantly higher contracted value than other ships delivered until now by the NCP. Although the basic designs were made by the Norwegian company Marin Design AS, the quality, competitiveness, professionalism and experience of Croatian shipbuilders were crucial in bringing the construction of this hybrid vessel to Croatia.

The financial value is not the only significant feature of this project. It is the intention of Croatian and Norwegian partners to create the possibility of a multi-year production of this type of vessel, for both Norwegian and other mariculture markets.

“Norway is undertaking major efforts to reduce emissions of CO2, nitrogen oxides and other carbon substances. The intention of Moen Marin AS, which has commissioned the ship, is to reduce the gas emissions by using electric motors whenever possible. Moen Marin AS has been building ships in Croatia for years. We have chosen Croatia for the implementation of this innovative project due to our positive experiences from previous projects and the combination of expert skills, competitive pricing and significant capacities that Croatia has,” said Vegar Livik, the project engineer at Moen Marin AS.

Earlier this year, the shipyard has signed new contracts for several other vessels which the Croatian partners will produce for the Norwegian client. With these new contracts, the Šibenik shipyard will achieve a remarkable result of making a total of 100 vessels for the global mariculture markets in the last ten years.

According to data provided by NCP Group director Roko Vuletić, NCP completed last year with 15 supplied catamarans to the Norwegian customer, and similar production volume is expected in 2019. “We have been monitoring the trends in ship electrification as a technology for the future, with a view of reducing the emissions of harmful gases. We believe that this project will enable us to acquire the necessary practical knowledge for the installation of electrical systems and that the acquired competences will be used in the future projects of electrification of the propulsion systems on ships,” said Vuletić.

Since the beginning of exports to Norwegian customers, including in 2018, as many as 91 ships were delivered from the Šibenik NCP shipyard, eight from Tehnomont in Pula, 11 from the Oštro shipyard in Kaštela, and one ship by Intelligent Marine Solution from Šibenik. The value of all exported vessels in these ten years to clients in international mariculture markets is over 100 million euros.

Translated from Jutarnji List (reported by Jozo Vrdoljak).

More news about Croatian shipbuilding industry can be found in the Business section.

ZAGREB, February 18, 2019 - Croatian Economy Minister Darko Horvat said in Brussels on Monday that talks would be held with European Commission officials to discuss the situation in the ailing Uljanik shipbuilding group, after which more would be known as to whether and how much the Croatian state may become involved in dealing with the crisis in the Pula-based group.

Horvat was attending a meeting of the Competitiveness Council and his assistant Zvonimir Novak was heading a delegation that would discuss Uljanik with EC officials.

"I expect talks with the EC on the possibility of bridging over the period from today to the day when the shipyard's restructuring programme is to be verified," said Horvat.

Horvat said that a meeting with the Luxembourg-based JDN group, which had commissioned a 124 million euro self-propelled dredger from Uljanik, was held on Sunday.

In late January, the client terminated the contract for the construction of the vessel because Uljanik was unable to deliver it in line with the contract.

Horvat said that he had good news and that after the Monday meeting it was decided that the vessel would stay and most probably be completed in the Pula shipyard.

According to unofficial information carried by Croatian media, the Economy Ministry plans to put forward a proposal to the EC under which the ministry would, on its own or together with JDN, finance the completion of the vessel to prevent a situation in which the Croatian state would have to pay guarantees worth billions of kuna.

Several more vessels are at the initial stage of construction in the Pula shipyard and the state has also issued guarantees for them. Attempts will be made to obtain permission to have those vessels, too, completed by Uljanik so as to prevent the activation of guarantees.

According to media reports, the Croatian delegation will try to obtain permission from the EC for the Croatian state to become involved in unblocking the account of the 3. Maj and Uljanik, the two shipyards making up the Uljanik group, and the selected strategic partner is also expected to become involved.

Earlier this month, the Uljanik group's management and supervisory boards chose Brodograđevna Industrija Split and Italy's Fincantieri as a strategic partner for the company's restructuring.

More news on the Uljanik situation can be found in the Business section.

ZAGREB, February 13, 2019 - Economy Minister Darko Horvat said on Tuesday that at the moment the government did not have a final decision as to whether Uljanik shipyard would go bankrupt or be bailed out, and described figures that are being mentioned in the media as the government's cost to restructure Uljanik as unverified.

Asked what costs of Uljanik's restructure the state would consider realistic and acceptable, Horvat said that he would not bother to explain the figure of 10 billion kuna being mentioned in the media.

He recalled that so far the state had issued and paid guarantees in the amount of 2.86 billion kuna and that a further 1.7 billion kuna was "hanging in the air if we don't complete the four ships that are at a high stage of being equipped."

According to Horvat, one of those ships currently requires 22 million euro.

If we invest in the completion of that ship, that would release the state from the obligation of paying 126 million euro in guarantees. As far as guarantees are concerned, the situation with the other three ships is somewhat easier and an additional 700 million kuna in guarantees is required, Horvat said.

Asked how negotiations with creditors were going regarding the unblocking of the 3. Maj dock's account, which, if not unblocked, will lead to the dock's bankruptcy, Horvat said that the shipyard's management was currently meeting with his assistant Zvonimir Novak and that one of the topics at that technical meeting was the unblocking of the account.

"Unblocking the account of the Rijeka-based shipyard requires about 107 million kuna while the account of the Pula dock (Uljanik) requires an additional 86 million kuna to be unblocked," Horvat said.

He announced that a team of representatives of the economy and finance ministries, Uljanik's management board and the selected strategic partner would go to Brussels to meet with officials of the European Commission and discuss "interim financing that would possibly include the strategic partner."

More news on the Uljanik shipyard can be found in the Business section.

ZAGREB, February 11, 2019 - The recently chosen strategic partner for the restructuring of the Pula-based Uljanik shipbuilding group, a consortium consisting of the Croatian company DIV and Italy's Fincantieri, on Monday signed a letter of intent with the Australian Scenic group on cooperation in the construction of ultra-luxury cruise ships, the Pula dock said.

Uljanik's management and supervisory board on February 7 chose Brodograđevna Industrija Split, which is part of the DIV group, and Italy's Fincantieri as its strategic partner for the restructuring of that ailing shipbuilding group.

The letter of intent refers to cooperation on a project whereby Scenic wants to expand its fleet of revolutionary discovery yachts.

Scenic President Glen Moroney said that he believed the shipyard's financial challenges of the past 18 months would end now and that the shipyard would be able to focus on completing the Scenic Eclipse vessel.

He added that construction work on the Scenic Eclipse 2 would start as soon as the restructuring programme for Uljanik was approved, noting that detailed work had already started on designing an entirely new series of discovery vessels, consisting of several ultra-luxury cruise ships, to be built for the Scenic group, the shipyard said.

The shipyard's CEO Emil Bulić said that Scenic's decision to have the Scenic Eclipse completed by Uljanik, despite the fact that Uljanik was going through the most difficult period in its long history, was of great importance for the survival of the shipyard and the continuation of its business processes.

The Scenic group was one of the companies that submitted a bid for strategic partnership in the restructuring of Uljanik.

More news on the Uljanik shipyard can be found in the Business section.

ZAGREB, February 9, 2019 - Brodosplit management board chairman Tomislav Debeljak said on Saturday that at the moment it was important to ensure a financial injection for the Uljanik shipbuilding group and that a possible folding of the Uljanik and 3. Maj docks would mean the end of shipbuilding as a strategic industry in Croatia.

Speaking to Hina, he said the injection was necessary "to drastically cut the total expenses" and that it was also important "to reach a quick agreement between everyone involved so as to ensure all the conditions for recapitalisation."

Earlier this week the Brodosplit dock was selected as a strategic partner for the Uljanik Group.

Debeljak said he did not expect any problems with the unions active in Uljanik. "If we reach an agreement, we will have to urgently draw up and agree a restructuring plan and forward it to the European Commission for approval."

He said the Commission had approved a restructuring plan for Brodosplit at once and that he did not expect any delays with the one for Uljanik. He added that Brodosplit was "not interested in the real estate business", only in shipbuilding. "We would do the same thing we did in Brodosplit, which is efficient business on the world shipbuilding market and generating profit without state aid."

Debeljak said that if Uljanik and 3. Maj were to fold, the consequences for shipbuilding in Croatia would be grave, including for Brodosplit, at a time when the market had improved.

He said he wanted Croatia's shipbuilding to be strong, competitive and profitable, recalling that in 163 years Uljanik and 3. Maj had built all types of ships, delivering them worldwide. He said salvaging the two docks was important for keeping jobs as well as for progress in technology, education and science.

Asked about the impact of Brodosplit's engagement in the Uljanik Group, Debeljak said Croatia would have three large shipyards instead of one, "which would operate successfully and profitably, improving the balance of industrial production and exports without state aid."

He said Croatian shipyards could compete in the construction of passenger ships, and recalled that Brodosplit was building polar expedition cruise vessels for the Dutch company Oceanwide Expeditions and the US company Quark Expeditions.

More news on the Croatian shipbuilding industry can be found in the Business section.

ZAGREB, February 9, 2019 - Parliament Speaker Gordan Jandroković said on Friday that he hoped that negotiations between the government, DIV owner Tomislav Debeljak and partners will result in a solution that will salvage and secure long-term sustainability of the Uljanik and 3. Maj shipyards and competitiveness on the international market.

"The government and the responsible ministry have invested a lot of effort for that process to head in a positive direction. Unfortunately, the shipyards have been generating huge losses for decades. We are talking about tens of billions that went into subsidies which in the end didn't prove to be good. Now Debeljak's DIV, together with Fincantieri as a partner, has come forward in an attempt to pull Uljanik and 3. Maj out of crisis," Jandroković told reporters.

We would all like a solution to be found that will secure long-term sustainability of the shipyards, competitiveness on the international market, so that they no longer generate losses and that, apart from the guarantees that the state took on in the past period, there are no more costs for our taxpayers, Jandroković said.

He described as absolutely understandable Debeljak's stance that he isn't prepared to financially settle what happened previously, but invest in what will be in the future. "He can't be responsible for what occurred previously. The state issued guarantees and stands behind them and has to cover them, but the final arrangement will be negotiated. It is normal that Debeljak and his partners are giving their private money and will see to every kuna, which is a logical demand of his, but the state will protect its interests too," Jandroković said.

It is obvious that interest in Croatian shipyards exists as several interested companies have come forward that see prospects in them. Therefore, there is reason for optimism and I hope that these expectations are realistic, Jandroković said.

He underscored that it wasn't realistic for taxpayers to pay for the cost of restructuring, amounting to 10 billion kuna. "Taxpayers have taken on significant obligations through state guarantees over the past 20 years and let's leave the final outcome of the negotiations to the relevant minister, shipyards' managements and potential strategic partners," he added.

More news on the Uljanik shipyard can be found in the Business section.

ZAGREB, February 8, 2019 - The Minister of Economy, Entrepreneurship and Crafts, Darko Horvat, said on Thursday that good prospects existed for restructuring of Uljanik if the new strategic partner proved to be financially capable, otherwise serious problems would occur because there was no more time for salvaging shipbuilding in Rijeka and Pula.

The management and supervisory boards of the Uljanik shipbuilding group on Thursday selected the Brodograđevna Industrija Split, or Brodosplit, as the strategic partner and an agreement will be concluded to regulate mutual rights and obligations to as soon as possible draw up an acceptable and implementable restructuring programme for the Uljanik company and shipyard.

"If... we get clear indicators that, in addition to the strategic partner's wish to enter the restructuring phase, it shows that it is financially capable of it, I think that a chance exists," Horvat told reporters in Government House.

"If during the making of the restructuring programme it is established or we get clear information that the strategic partner doesn't have that financial ability, I'm afraid that we will have a serious problem because there is no time left to secure a new life for shipbuilding in Rijeka and Pula," Horvat warned.

He added that the strategic partners (Brodosplit & Fincantieri) claimed in their bid that they had the necessary financial ability for Uljanik's restructuring and submitted financial data showing that they are solvent companies.

Until such time that the strategic partner proves that it has that ability, "the strategic partnership is a potential with good wishes and very little possibilities."

Answering a reporter's question, Horvat said that the bid was submitted jointly by the Brodograđevna Industrija Split, owned by the DIV Group, and the Italian shipbuilder Fincantieri at a ratio of 70% to 30%.

He added that negotiations were underway with a client for a new ship for which the state has issued guarantees in the amount of 126 million euro. He warned that the state will have to pay that guarantee if the ship is not completed or if Uljanik goes bankrupt. That is why the state wants the ship to be built and estimates that that requires about 22 million euro.

"How that burden will be shared with the client is a matter of negotiation and I hope that in the next 10 days or so that will be completed. Whatever we invest in completing the ship will give us a chance to not only halve the 1.7 billion kuna Finance Minister Zdravko Marić is speaking about, but to save 1 billion kuna," Horvat said.

Asked whether he was satisfied with the choice of the strategic partner, Horvat said that he would refrain from making any subjective assessments and that he considered as relevant the financial reports about the status of Brodosplit and Fincantieri for 2016 and 2017 that were included in the bid. They show good business results, which offers hope that the strategic partners will use their know-how to reduce the huge deficit in the business accounts of the 3. Maj and Uljanik docks, said Horvat.

Asked whether Brodosplit used state money earmarked for restructuring in 2017 as intended, Horvat said that the ministry monitored Croatia's shipbuilding and that this information was available to the public on an annual basis.

"I'm certain that the management board carefully analysed all those reports over the past few days. Should there be any need for some other bodies to become involved in any analysis before the restructuring programme is adopted, similarly to the start of 2017, when we conducted an inspection of how funds and grants for Uljanik were expended, I think that there is no reason why we shouldn't be able to check the situation and status of the dock in Split as well," Horvat said.

He did not wish to specify how much Uljanik's bailout would cost taxpayers. He added that reports saying that the restructuring of the Rijeka and Pula docks could cost 1.2 billion didn't come from the ministry. I would like to ask those who presented that data, how they came to that figure and who their source was, he said.

Finance Minister Zdravko Marić did not want to comment on how much the restructuring of the Uljanik group could cost and repeated how much had been paid to date in enforced guarantees. "To date, we've paid 2.545 billion kuna in 2018 and payments have continued in 2019. In January an additional 250 million kuna was paid in enforced guarantees. We are approaching the amount of about 2.8 billion kuna, which is in line with our initial estimates at the time when the crisis broke out," Marić told reporters.

When reminded that he said that this year 1.5 billion kuna would be paid in state guarantees for Uljanik, Marić reiterated that his ministry estimated that a portion of that amount would very likely have to be paid.

He added that construction work on a big ship, which was also the most valuable vessel under construction, was nearing completion and that he hoped a solution for that ship would be found and that guarantees would not have to be paid for it.

Marić did not wish to comment on speculation that the strategic partners estimated that the state would have to contribute to Uljanik's bailout with about 10 billion kuna. He also didn't want to comment on previous statements by Minister Horvat that Uljanik's restructuring would cost about 800 million euro and that the state would have to pay half of that.

He reiterated though that he had always advocated that the integrity of state guarantees had to be secured and that if the state issued a guarantee, it had to settle its obligations and pay guarantees. On the other hand, I have said many times that the question should be asked why so many guarantees have been issued and how, he said.

More news on the Croatian shipbuilding industry can be found in the Business section.

ZAGREB, February 7, 2019 - Brodograđevna Industrija Split, or Brodosplit, has been selected as the strategic partner for the ailing Pula-based Uljanik shipyard, Uljanik announced in a statement via the Zagreb Stock Exchange on Thursday.

The decision was made at a joint meeting of the Pula shipyard's management and supervisory boards on Thursday.

An agreement will be concluded with the selected strategic partner to regulate mutual rights and obligations. Under the agreement, the strategic partner will be required to draw up an acceptable and implementable restructuring programme for the Uljanik company and shipyard, the statement said.

The selected strategic partner will be allowed to enter the ownership structure of the Uljanik company through recapitalisation, as decided by the General Assembly, it added.

On December 21, the Pula-based terminated the strategic partnership with Kermas Energija and initiated a procedure for the selection of a new strategic partner.

More news on the Pula shipyard can be found in the Business section.