ZAGREB, May 22, 2019 - After holding talks in Zagreb on Tuesday evening with a delegation of the China Shipbuilding Industry Corporation (CSIC), which on Monday visited Zagreb's Brodarski Institut shipbuilding institute and on Tuesday the Rijeka-based 3. Maj shipyard, Croatian Economy Minister Darko Horvat said that there was potential for cooperation with the Chinese partners.

Addressing the press after the talks, the Croatian minister said that the 14-engineer expert delegation had toured the Zagreb-based institute and the Rijeka shipyard and that they were now going to submit a report to the company's management.

It remains to be seen which decision the management will make, Horvat said, expressing confidence that the Chinese side would soon inform Croatia of its decision, be it positive or negative.

The Chinese delegation on Monday visited all the 14 laboratories of the Zagreb-based institute and there are currently good indications of possible cooperation in some concrete projects, the minister said. "A step forward has been made toward potential future cooperation."

He added that it seemed to him that the Chinese side is ready to for a joint venture with Brodarski Institut.

When asked by the press what the Uljanik shipyard in Pula could expect, the minister admitted that the talks had focused mainly on shipbuilding in China and shipbuilding in Rijeka.

The Chinese delegation has shown satisfaction with the fact that a segment of the Rijeka-based dock has been upgraded and offers possibilities of cooperation, according to him.

He admitted that there were still no strict deadlines for any future steps.

He also made it clear that the government did not expect the Chinese side to be a strategic partner that would pay off the shipyards' debts from the past.

In the meantime, the Pula-based Uljanik shipyard on Tuesday reported on the Zagreb Stock Exchange that due to bankruptcy proceedings being launched in Uljanik d.d. and, hence, the inability to deliver a Ro-Ro ship to the CLdN shipping company, the client has cancelled the contract.

Late in January, the same client cancelled a contract for the construction of another Ro-Ro ship because Uljanik was not in a position to deliver the ship.

Uljanik closed the deal for the construction of 2+2+2 ships for the Luxembourg client in March 2016.

The Commercial Court in Pazin decided on May 17 to open bankruptcy proceedings in the Uljanik shipbuilding group's umbrella company, Uljanik d.d.

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

ZAGREB, May 17, 2019 - Unprofitable businesses will no longer be financed from the state budget, Economy Minister Darko Horvat said on Friday, noting that after bankruptcy proceedings had been launched for Uljanik d.d., the umbrella company of the Uljanik shipbuilding group, negotiations would continue with investors who had commissioned four ships that were being built by the Pula-based group.

The Commercial Court in Pazin decided earlier in the day to launch bankruptcy proceedings for the company over a debt of 98 million kuna.

Horvat said that he learned of the proceedings from media reports. "I... am aware of the fact that some things that are in the final stage of negotiations and concern the four vessels that are under construction could have been negotiated outside the bankruptcy proceedings. But the process goes on and we are continuing talks with both Jan De Nul and colleagues from Canada on ways of completing those ships, in the Pula or the Rijeka dock or somewhere else," Horvat told reporters on the margins on a business conference.

Horvat said that banks and the state would become owners of the ships that are being built by Uljanik.

He said that talks with the Belgian Jan De Nul group, for which Uljanik is building a dredger for which the government has given collateral in the amount of 125 million euro, were continuing.

Asked to comment on Uljanik workers' 'congratulating' him on buying taxpayers vessels worth millions of euros and saying that he cared more about ships than people, Horvat said that he did not agree. "We tried to postpone the bankruptcy proceedings as much as we could.... but the state budget will no longer finance unprofitable projects," said Horvat.

Asked what the bankruptcy of the umbrella company of the Uljanik group meant for other companies in that group, he said that bankruptcy proceedings would be launched successively in other companies as well.

He, too, reiterated that a technical delegation of the China Shipbuilding Industry Corporation (CSIC) would arrive in Croatia on Monday and that aside from Uljanik, it would also visit the Zagreb-based Brodarski Institut and the Rijeka-based 3. Maj shipyard.

Asked if talks were also underway with Danko Končar and Tomislav Debeljak about the takeover of individual Uljanik group companies or the completion of individual vessels, Horvat said that the government was not conducting talks with either man. "I'm not thinking in that direction at all," he said.

He explained that after bankruptcy, Uljanik workers would be registered with the Employment Service and that Labour and Pension System Minister Marko Pavić had come up with measures to help them return to the labour market. "Also, close to 1,200 people will get from the state the maximum they can get at the moment," he said.

Uljanik d.d. has 20 employees, but so far, a number of companies from the Uljanik group have gone bankrupt. Earlier this week, bankruptcy proceedings were opened for the Uljanik shipyard, which has 1,118 employees. Bankruptcy proceedings have also been launched for five other companies from this group.

Whether bankruptcy proceedings will also be launched for the 3. Maj shipyard, which is part of the Uljanik group and employs 800 people, will be known at a hearing at the Rijeka Commercial Court set for June 5.

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

ZAGREB, May 1, 2019 - Economy Minister Darko Horvat said Wednesday during a break in a meeting with a Chinese delegation touring the Ulljanik and 3. Maj shipyards, that it was indicated during the talks that there was a possibility for the continuation of production in Pula and Rijeka, which does not have to be entirely related to shipbuilding.

Horvat who met with a China Shipyard Industry Corporationa (CSIC) at Zagreb's Airport, said that both locations were offered to the Chinese, not only for shipbuilding but also for other forms of production as well.

Several CSIC representatives arrived in Uljanik already on Monday to see the plants and make an unofficial assessment of the shipyards production capacities.

Uljanik's workers and unionists said they were not sceptical about the Chinese but about the Croatian government and its promises.

Union representatives are not included in the talks with the Chinese executives, at least for the time being.

Prime Minister Andrej Plenković said on Monday that the talks with CISC representatives about the Uljanik and 3. Maj docks were very substantive and open and that after it visits the two shipyards, the Chinese delegation is expected to consider the possibility of cooperation or partnership.

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

ZAGREB, April 3, 2019 - Economy Minister Darko Horvat on Wednesday said that it was possible for ships to be built in the Pula and Rijeka docks for the Jadrolinija liner shipping company, however, that requires numerous details and requires a public call for bids.

Asked by the press who would pay for those ships to be built, Horvat said "whoever needs them."

With regard to the deadlines for the ships to be built, the minister added "that will be seen with the people in Jadrolinija," who, he said will "have to renew the fleet in any case."

In response to comments by reporters that all that would require a public call for bids, Horvat said "then there will be a public call for bids." Reporters also commented on statements by Finance Minister Zdravko Marić who warned that "the devil is in the details," and that in this case there were many of them, Horvat said that the finance minister is absolutely right.

Speaking about the options facing the Uljanik shipbuilding group earlier in the week, Minister Horvat stated that Jadrolinija should renew its fleet and that it needed 17 or 18 new ships.

"I'm certain that Jadrolinija will have to reconstruct or build its fleet. The fact that a public call for bids will be opened means that the ships will have to be contracted pursuant to the tender conditions. Otherwise, Jadrolinija would have to be excluded from the process of public procurement and we have to get approval from the European Commission for that," Horvat told N1 Television earlier in the week.

More news about Jadrolinija can be found in the Business section.

ZAGREB, March 20, 2019 - Executives of Taavura Holdings, one of Israel's largest road haulage and logistics companies, and Hyundai Motor Europe have visited Croatia to explore investment opportunities, the Ministry of Economy, Entrepreneurship and Crafts said in a statement on Tuesday.

The representatives of the two companies met with Minister of Economy, Entrepreneurship and Crafts Darko Horvat and Prime Minister Andrej Plenković.

Plenković said that with its policy of fiscal consolidation and tax cuts Croatia was trying to improve the business framework for new investment, particularly in areas that implied the development of new technologies.

Horvat presented Croatia's comparative advantages for investment and opportunities provided under the Investment Stimulation Act and the State Aid for Research and Development Projects Act.

The Israeli delegation was led by the CEO of Taavura Holdings, Zvika Livnat, management board member Shay Livnat and management board vice-president Eitan Damry.

"Expressing their readiness for new investments, such as the opening of a new sales and repair centre and future headquarters of Hyundai Croatia in Zagreb, they supported government efforts to invest in the education of young people, notably in the ICT sector," the ministry said in a press release.

One of the reasons for the meeting was the opening of the new sales and repair centre and the headquarters of Hyundai Croatia in Zagreb's Jankomir district. The grand opening will be attended by Minister Horvat.

More news about investment opportunities can be found in the Business section.

ZAGREB, March 12, 2019 - The government is expected to decide this week whether the restructuring of the Uljanik shipbuilding group will be launched or not, Economy Minister Darko Horvat said on Monday following a meeting with Uljanik's management and strategic partner, Tomislav Debeljak.

"There are only two options - we will either opt for restructuring and finance this interim phase with a loan that won't burden the state budget or the strategic partner's liquidity, or we will opt for a bankruptcy," Horvat told reporters after the meeting. He said that a joint proposal was aimed at a "new rescue aid loan" to ensure interim financing.

The minister said that the strategic partner has "good intentions to participate in creating a better and sustainable Uljanik with his resources of more than 35 million euro." "However, we have to accept the fact that the deficit produced in the past 10, 12 or 15 years is somewhere in the region of between 900 million and 1.1 billion euro," Horvat said.

He added that the strategic partner insists that all debts from the past be covered by the state while assuring that the state budget will not have to pay even one kuna for Uljanik in the future. "I'm sure a decision will be made in the next few days. If it is positive, then certain guarantees will be discussed at the next government meeting regarding this model. If that decision is not reached, certain solutions will be made at the next cabinet meeting regardless of the negative or positive impact on the workers and unions."

Horvat said that a court hearing on a possible bankruptcy for the 3. Maj shipyard was scheduled for Tuesday and that he would try to convince the judge that conditions have been met for the bankruptcy not to go ahead.

He added that Uljanik's possible bankruptcy could cost the state between 800 million and 900 million euro, whereas the group's restructuring required between 860 million euro to 1.1 billion euro.

Tomislav Debeljak said he hopes the state will want to embark on healing the company and head toward its restructuring. He said that the restructuring plan for Uljanik is in its final phase.

The president of the Uljanik Group's management board Emil Bulić said that they had received assurances that a decision would be made this week and that efforts were being made to avoid insolvency procedures.

SSSH union federation leader Mladen Novosel said that the unions expect the government to come up with a final decision when it meets on Friday whether to restructure the group or not. If it decides for restructuring, we expect the technical details to be resolved with banks in the next few days so that workers can be paid their wages and remain at the dock and finish the ships that need to be completed.

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

ZAGREB, February 26, 2019 - A hearing in the process of determining preconditions to launch bankruptcy proceedings at the 3. Maj shipyard that was scheduled for Tuesday at Rijeka Commercial Court, was adjourned until March 12, when it should be known whether workers at the dock will receive their unpaid wages, otherwise bankruptcy seems inevitable.

If by March 12, the question of workers' wages isn't settled, then bankruptcy is likely. If it is resolved by then, there is some room for a solution, Judge Liljana Ugrin said.

According to the court, the dock's account has been blocked due to a debt of 87 million kuna, yet yesterday for example that blockade amounted to HRK 76 million. Workers are seeking 11.9 million kuna for their overdue wages, suppliers are demanding 46 million kuna and the state's receivables amount to 21 million kuna, but the situation regarding those amounts is changing day in and day out.

Workers' representatives and Uljanik's management agreed to the adjournment as did representatives of the Strojopromet company which in fact lodged the request for bankruptcy proceedings along with the FINA financial agency.

The Rijeka-based dock is part of the ailing Uljanik Group in Pula.

Responding to reporters outside Government House earlier on Tuesday, Economy Minister Darko Horvat said that he cannot foretell the court's decisions however the government is trying to provide the relevant information in order to give a little more room so that bankruptcy proceedings can be deferred for a few days or weeks, he said.

He added that negotiations are underway with a client, the Jan De Nul Group and Brodosplit's owner, Tomislav Debeljak, as Uljanik's strategic partner and that he is convinced that in the next few days, he will make an appropriate decision and present a restructuring plan however "clear guarantees are necessary to verify that the strategic partner is currently financially prepared to follow the restructuring process."

"At the moment the key is - does the strategic partner have that ability. This is exactly the same question we asked the former strategic partner. If that verification is clear then that will be good news, if not, then I'm afraid there is no help," said Horvat.

Asked whether the strategic partner has been set a deadline to prove its financial capacities, Horvat said that the strategic partner was asked a few days ago about the matter.

I'm certain that this week is enough time for the strategic partner to clearly define whether he want to and can, after that the state will react, the minister said.

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 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, January 23, 2019 - Economy Minister Darko Horvat said before a cabinet meeting on Wednesday that the government expected at least two offers from strategic partners for the Uljanik Group by Friday.

"Friday will be the day during which we will receive at least two offers. How serious these offers will be... We will give the opportunity to the management to open and analyse the offers on Saturday and present them to the Economy Ministry at 11 am Monday," Horvat said, adding that a meeting with unionists and the management would be held at the ministry on Tuesday.

Asked if that meant that by the end of next week the public would know the name of the new owner of the Uljanik Group, Horvat said no. "I expect the text of these offers to be very complicated. The management will most definitely need time to analyse them," he added.

He also said the government had not set up a deadline, adding that the public would be updated by the management on Friday or Saturday.

Horvat said investors were interested in Croatia's shipbuilding industry, but declined to talk details.

Due to great interest from potential investors, the deadline for due diligence in the Uljanik dock has been extended from January 18 to January 24, while the deadline for the submission of strategic partnership bids remained unchanged -- 2000 hrs, January 25.

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