ZAGREB, December 21, 2018 - The supervisory board of the Uljanik shipyard has decided to terminate the strategic partnership with Danko Končar and his Kermas Energija company, and seek another partner who will be willing to invest in the shipyard's restructuring, the Pula-based shipyard said on Friday.

The decision was made at a joint meeting of the shipyard's supervisory and management boards on Friday. The agreement with Kermas Energija was reached on March 28.

Uljanik invited all interested investors to express their interest in a strategic partnership and recapitalisation in accordance with decisions reached at shareholders' meetings of February 16 and October 16 this year. A data room will be opened for all prospective strategic partners.

The shop steward of the Metal Workers' Union, Đino Šverko, hailed the decision, saying that "any progress is welcome for the shipyard."

"This decision could have been taken six months ago. The question now is how the workers will survive the next five weeks. They don't have any more time to wait. Unfortunately, there has been a lot of blame shifting lately," Šverko said.

The head of the strike committee, Boris Cerovac, also welcomed the decision, saying that "the trade unions were always against Danko Končar and his Kermas Energija being Uljanik's strategic partner."

"This decision should have been taken six months ago, but obviously it didn't suit someone. Someone wanted us to disappear, they wanted workers to give notice of their own accord. This decision is good, but what will happen if we don't find a strategic partner?" Cerovac wondered.

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

ZAGREB, December 17, 2018 - Most of the workers at the Uljanik shipyard in Pula returned to work on Monday after a two-week strike over unpaid wages.

They are still owed the difference between the minimum and full wage for September and October, and unless they are paid the minimum wage by the end of this week, they will also be owed the full wage for November.

"We still don't know what will be with the remainder of our wages and when they will be paid," strike committee chairman Boris Cerovac told Hina. "The strike has been put on hold, but the strike committee reserves the right to call it again at any time," he added.

"The workers have returned to work, but they are visibly dissatisfied and angry with this situation. This agony has been going on for too long, and there's no news of any progress regarding a final restructuring plan and a strategic partner," Cerovac said.

He said that the strike committee was meeting with the management again today to get a confirmation that the minimum wage for November would be paid by the end of the week.

More news on Croatian shipyards can be found in our Business section.

December 6, 2018 — The search for the Uljanik Shipyard’s savior didn’t reach into the depths of the Croatian or European business community. In fact, it didn’t go far at all. The government and current management reportedly settled on the man already holding the position since March: Danko Končar, a billionaire mining magnate and one of the richest members of Croatia’s diaspora.

The ailing shipyard’s board and government’s Economic Ministry are reportedly drafting a restructuring program which will be sent to Brussels, designed to end a year-long effort to map Uljanik’s way out of HRK 4.5 billion of debt. The obligations include substantial state guarantees which could put a dent into the Croatian budget if unpaid.

The Uljanik Group’s dissolution would cost thousands of jobs at a time when the nation can ill-afford another export-oriented economic sector collapsing.

“I would say this is now close to the end,” said president of Uljanik’s Management Board Emil Bulić. “It is time for us to reach a final decision.”

Končar claims his company Kermas Limited cannot begin its intervention until both the Croatian government and European Commission approve the plan.

Končar won't use his estimated $15 billion in net worth to directly bail out Uljanik. The new program doesn’t equate a strategic parter with financing, according to the Zagreb native.

The 76-year-old Končar added he’s willing to share the strategic partner role with others, or even step aside if necessary.

When asked if Uljanik is sustainable as a shipbuilding operation, Končar reportedly said he’s “always optimistic.” Earlier restructuring proposals suggested ditching the shipyard wholesale for real estate and tourism projects.

The shipbuilding industry's seemingly-perpetual crisis has been an albatross around the neck of successive Croatian governments. Former Prime Minister Zoran Milanović was among several to declare the ailing shipbuilding group’s restructuring “done” — in 2015.

“Croatia has not only saved, but has also strengthened its shipbuilding industry,” he said at the time, right after the group added 22 ships to its order books. The orders would keep the shipyard busy until 2018. Croatia's shipyards enjoyed a Renaissance. It didn't last.

The long list of profitable orders began petering out in late 2017, with few new ones taking their place. Uljanik Group’s 2017 losses totaled 680 million kuna, despite a growth in revenue over the previous year. As soon as the calendar flipped to 2018, Croatia’ largest shipyard was in crisis. The indebted shipyards were soon being compared to the flailing conglomerate Agrokor.

The shipyard needed an urgent injection of cash, setting off a year-long back-and-forth between a Croatian government trying to rescue the shipyards, and European rules limiting state aid.

The true scope of Uljanik’s financial distress emerged this summer, after the drawn-out search for a generous, cash-flush strategic partner instead produced a profit-first fiscal disciplinarian: Končar. The billionaire was already leading another shipyard, Brodotrogir in Split, through a messy restructuring. Eventually, Ulanjik stop paying its employees.

The lack of regular paychecks led to several union-backed strikes by workers at both Uljanik in Pula and 3. Maj in Rijeka.

The first attempt at a restructuring was sent back by the European Commission, with 75 objections. Some plans to rescue the shipyard envisaged a total abandonment of shipbuilding, instead turning to real estate.

The company has been living in triage ever since, seeking a strategic partner for months. Italian firm Finacantieri and Ukraine’s Smart Holding have been bandied about, alongside Končar, as potential partners. Yet neither has officially signed on.

The government’s recently-passed budget includes a minimum HRK 2.5 billion in enforced guarantees allocated to the Uljanik shipbuilding group.

Conversations between Končar and striking unions three days ago did not yield results, according to Boris Cerovac, leader of the Jadransko Union.

“[Končar told us] if we think of a ‘strategic partner’ as someone who will gives us advice, then yes we have that kind of strategic partner,” Cerovac said after the fruitless meeting. “If we think we have a ‘strategic partern’ who will give us money, that we do not have.”

That meeting ended with yet another strike by Uljanik’s workers.

Uljanik’s union leaders claim time is running out to cobble together a deal, as workers continue to clock in and out without receiving a full paycheck since August. (They have, however, gotten minimum wages of about HRK 2.750 for the month of October.)

The latest proposed rescue of Uljanik still leaves a door open for the company's other ailing shipyard — 3. Maj — to join the restructuring program. It also gives Končar leeway to back out of the deal if any changes or additions don’t suit him, Assistant Minister of Economics Zvonimir Novak said, according to Nacional.

Končar was coy about any other shipyard’s potential involvement, especially 3. Maj, which some claim is so close to Uljanik it creates needless competition. Končar disagreed, saying the shipyards' proximity could lead to synergy, not a duplication of services.

“One function can be handled in one shipyard, and another in the other one,” he said.

For more on the Uljanik shipyard crisis, click here.

ZAGREB, December 3, 2018 - Economy, Entrepreneurship and Crafts Minister Darko Horvat said on Monday that the strike at Uljanik shouldn't have been launched once again and although it was the legitimate right of workers to strike, that industrial action would not solve the problems of the dock.

"In my opinion, this strike shouldn't have occurred. Despite the full and legitimate right of every worker to strike, I think that the strike won't solve Uljanik's problem," Horvat told reporters on the margins of an award ceremony for the best small and medium-sized entrepreneurs in 2018, organised by the Večernji List and Poslovni Dnevnik dailies.

Workers at the Pula-based dock started striking again on Monday and the head of the strike committee, Boris Cerovac, said that they were compelled to do so because workers haven't been given any positive signal from the management board and that a meeting with Prime Minister Andrej Plenković and Economy Minister Darko Horvat had not been held.

Asked to comment on the new strike at the dock, Minister Horvat said that unlike Cerovac whom the minister criticised for passing the buck from Pula to Zagreb, he wouldn't do that too.

Horvat added that for some time now he had been trying "to find a strategic partner that will invest in shipyards together with the government."

Alongside everything that the state has done for Uljanik and its workers this year, this type of pressure by the union, primarily Cerovac, is putting on the government "isn't regular nor fair," Horvat said.

He reiterated that problems exist but that at the moment, unlike other stakeholders in that dispute, he is looking for real strategic partners who have the financial ability to support the restructuring, he said.

Asked by reporters whether he was any closer to finding a strategic partner and what was about Danko Končar, the minister said that at the moment the government and ministry were not conducting talks with Končar.

For more on the Uljanik shipyard crisis, click here.

ZAGREB, November 29, 2018 - Croatian Minister of Economy, Entrepreneurship and Crafts, Darko Horvat, on Thursday confirmed that he had received a new restructuring concept for the shipyards in Rijeka and Pula, but said the government still isn't certain whether Uljanik has a strong strategic partner that can financially support the dynamics of the restructuring.

"I received the new concept yesterday, the seventh or eighth draft of the restructuring programme, and it foresees 50% participation from a strategic partner, while the other 50%, about 660 million euro, would have to be provided by the state. However, the thing we don't have at the moment or something neither the government nor I are certain of, is whether the state or Uljanik have a strong strategic partner that is prepared and capable of financially supporting the restructuring dynamic," Horvat said in Brussels where he was attending a Competitiveness Council meeting.

Horvat added that, unlike three or four months ago, today there are "two very concrete proposals, two reputable shipbuilding groups that have managed in their business operations to secure the continuation of shipbuilding."

"The Italian Finacantieri and the Ukraine Smart Holding have very clear guidelines that we are currently agreeing so that we can enable them to access the data room and conduct due diligence of all processes and the actual financial situation in the 3. Maj and Uljanik docks, so that they can submit a relevant bid that is acceptable to the management board and the government. That would be a good and clear sign of the possible start of restructuring of shipbuilding in Pula and in Rijeka," Horvat said.

The government's role is to assist the management board in finding a strategic partner for the restructuring of the two shipyards that would be prepared to cover 50% of the costs of that process. According to EU rules, the state's share in restructuring can be no more than 50%.

Horvat also said that he had received an appeal for assistance from workers at the 3. Maj dock, but noted that 3. Maj was owned by the Uljanik Group and that the government doesn't have the legitimacy to treat the companies within the Group separately.

For more on the Croatian shipyard crisis, click here.

ZAGREB, November 24, 2018 - Minister of Economy, Entrepreneurship and Crafts Darko Horvat said on Saturday that he had received the restructuring plan for Uljanik shipyard and that he would have more specific information after a meeting with the management board on Tuesday.

"The draft plan has come in for analysis by the Economy Ministry. We will respond to those figures on Tuesday. The management board has been invited to a brief meeting in the Ministry on Tuesday and after that meeting in the afternoon I will give you all relevant information on how to proceed with that programme and what partner we will enter into concrete talks with," Horvat said.

In July, the European Commission sent 75 objections to the previous restructuring plan. The present plan was prepared by the new management board with Emil Bulić at the helm.

Minister Horvat said on Friday that two European groups were interested in Uljanik's restructuring - Ukraine's Smart Holding and Fincantieri from Italy.

Horvat was attending the "Coffee with Citizens" event and said that this was the 11th event organised with the aim of informing citizens of their consumer rights and answering their questions regarding consumer problems. "That is a very interesting area for every citizen in Croatia but also in the area of the EU," he added.

The amendments to the Consumer Protection Act proposed by the government are aimed at providing counselling and educating consumers and I hope that consumers and retailers will use the opportunities being provided, the minister said.

He called on citizens to be careful and to be informed of their rights when purchasing something. "If anything that is unallowable occurs, they have the right to send a written complaint on the spot or on-line, if the product doesn't correspond to its specifications. If they do not receive a response from the retailer, they can return the goods and the retailer is obliged to intervene within 30 days...if the retailer does not respond to the complaint, there are institutions that every consumer can turn to and seek help either in the form of arbitration or counselling," he said.

Horvat said that until such time that he was appointed a minister, he too had sent complaints and returned goods, "sometimes successfully, sometimes not."

For more on the Uljanik shipyard, click here.

ZAGREB, November 22, 2018 - Economy Minister Darko Horvat said after the government session on Thursday that currently two serious strategic partners were interested in Uljanik, adding that in the end a decision would be made which partner is better for the Pula-based shipyard.

Asked if there was anything new regarding Uljanik, Horvat told the press there was nothing new. He added that his ministry expected a response from a potential strategic partner from Ukraine Smart Holding Group next week, adding that Italy's Fincantieri had already submitted its letter of intent.

Asked if the decision about a strategic partner would be made before the expiration of the 120-day deadline for automatic launch of bankruptcy procedure, having in mind that only about 20 days remain before the deadline runs out, Horvat said he was the last person to accede to the bankruptcy in Rijeka and Pula. "Until we exhaust all legal options available, there will be no bankruptcy," Horvat said.

Commenting on a reporter's remark that based on guarantees issued early this year, the only options at the moment are liquidation or restructuring and bankruptcy is out of the question, Horvat said he could partially agree with that statement, stressing that the state issued guarantees and was supposed to cover them to keep credibility, otherwise there was no point in issuing such guarantees.

Prime Minister Andrej Plenković on Monday received the owner of Ukraine's Smart Holding Group, Vadim Novinski, for talks on its interest in investing in Croatia's ailing Uljanik shipbuilding group. Novinski requested more detailed information about the current state of affairs in Uljanik and it was agreed that the Economy Ministry, in cooperation with the group's management, would provide it.

The president of the management board of the Split-based Brodosplit shipyard, Tomislav Debeljak, said after talks with representatives of the strike committee at the 3. Maj dock in Rijeka on Tuesday that Brodosplit would decide after due diligence if it was interested in investing in the ailing Rijeka shipyard.

Brodosplit or the DIV Group, owned by Debeljak, has expressed interest in possibly entering the 3. Maj dock together with the Ficantieri shipbuilding company from Italy. When asked outright if he was entering the ownership structure of 3. Maj, Debeljak said that that was a too explicit question and that he had come to the dock to see what could be done.

For more on Croatia’s troubled shipyards, click here.

ZAGREB, November 20, 2018 - Croatian Prime Minister Andrej Plenković received on Monday the owner of Ukraine's Smart Holding Group, Vadim Novinski, for talks on its interest in investing in Croatia's ailing Uljanik shipbuilding group. Plenković and the Ukrainian investor had a constructive and open talk, the government said in a press release.

Novinski requested more detailed information about the current state of affairs in Uljanik and it was agreed that the Economy Ministry, in cooperation with the group's management, would provide it, the press release said, adding that Economy Minister Darko Horvat was present at the talks.

In the meantime, workers of the Pula-based Uljanik shipyard, who have been on strike over unpaid salaries since October 20, will resume work on November 20, suspending the strike until the end of the month, strike committee chairman Boric Cerovac told Hina on Monday after a meeting between workers and management.

The meeting discussed the shipowners' dissatisfaction with the fact that work on their ships has been stopped, unpaid salaries, and the workers' wish to prove to the government that they want to earn their pay, he said.

At the end of the month, the decision to suspend the strike will be discussed again and it will certainly depend on the payment of salaries for September and October as well the government's endorsement of a restructuring programme the dock, Cerovac said.

He added that the strike might resume even before the end of the month if the dock's problems were not dealt with.

Cerovac said management told workers the restructuring programme would be sent to the government today, but workers were not told when the salaries for September and October might be paid.

For more on the problems in Croatian shipyards, click here.

Croatia's shipyards are struggling, and for a long time the state has had its hands firmly tied when it comes to offering them potential ways out of their issues. Uljanik's workers have previously gone as far as to take to the streets in protest against the way in which they're being treated, often going dangerously long periods without being paid. 

Issues at the very top of the management board have resulted in long wage delays for dedicated employees who have been made so desperate they have gone on strike, but it seems as of tomorrow, things will return to normal, at least for now...

As Morski writes on the 18th of November, 2018, in spite of the payment of minimum wages, negotiations between the Croatian Government and Uljanik's unions apparently did manage to bring fruit, as was announced on Monday, and the strike in which Uljanik's employees have continuously held since October the 22nd should come to an end.

''We've been paid the minimum for now, and we were promised that we'd not have to wait so long in October. We simply decided that it was time to stop the strike, because that's what the shipowners expect from us. We will be the ones ending ourselves if we don't continue to work. We'll take a fifteen day break from strike activities, but we won't disband the strike board,'' said Đino Šverko, a member of Uljanik's strike board, for N1.

He also said that Uljanik's employers had nothing against Uljanik and May 3 being separated.

''We have to start thinking about work. The strike is going on and on, if it lasts until the end of the month, we'll end up closing everything ourselves, we can't see a way out. We're starting work, we'll carry out our tasks and then everything remains in the hands of the the Croatian Government,'' Deni Širol told N1.

For more information on the state of the domestic economy, Croatian companies, business and the possible fate of Uljanik, make sure to follow our dedicated business page.

ZAGREB, November 15, 2018 - After a meeting between Prime Minister Andrej Plenković and the management boards of the 3. Maj dock and the Uljanik shipbuilding group, shipyard workers and unions on Thursday, union representative Juraj Šoljić said that workers will continue striking until their demands are met and workers, who received the minimum wage for September, are paid their full wage.

"Even if workers at 3. Maj were to stop their strike, they don't have anything to do," Šoljić said, underscoring that there is no material for them to work with that would enable the continuation of production at that Rijeka-based shipyard. He added that during the meeting with Prime Minister Plenković, workers' representatives reiterated their stance.

Workers are demanding the replacement of the 3. Maj Supervisory Board and the appointment of a new one, comprising two members from Pula and two from Rijeka in addition to the current workers' representative. They are also demanding that the dock's director, Maksimilijan Percan, be replaced, an emergency administration appointed, and all sectors that used to be part of 3. Maj, including the engine factory, be restored as part of the dock, as well as that workers' representative be included in preparing a restructuring plan for the Uljanik Group.

Workers also want the 3. Maj shipyard's separation from the Pula-based Uljanik to be included in the restructuring plan and that it be prepared carefully so that 3. Maj can continue working and contracting new jobs.

Šoljić said that workers want to know what will happen to the ships currently being built at the dock. Over the past two days, we had informal contact with the ships' owner regarding the completion of those ships because they mean life for 3. Maj, he added. He said that workers were told at the meeting that they would be able to participate in preparing the restructuring plan.

The unionist underscored that workers' representatives said that they would not back down from their demand that the Supervisory Board be replaced and a new one appointed, adding that if an agreement was not reached on that point, the state would have to step in.

Šoljić said that the management board had still not prepared the restructuring plan for Uljanik even though it was said that it would be completed by the start of the week. "As far as I understood, the potential partner for Uljanik has to prove its financial capacity for the programme to survive," he added.

He added that they were assured at the meeting that 3. Maj would not be shut down and that negotiations were being held with various partners.

With regard to separating 3. Maj from Uljanik, Šoljić said that it can't be done overnight and that it is necessary to regulate Uljanik's repayment of a 523 million kuna loan given to it by 3. Maj, the completion of the four ships under construction, investment into technology and injection of fresh capital by a new partner, as well as the sale of shares.

I believe that the bids also offer something and I trust that a model will be found for 3. Maj's survival and that if nothing else, it will be privatised and operate independently, Šoljić concluded.

For more on Croatia’s shipyards, click here.