Croatian shipbuilder Uljanik plunged back into crisis

Croatian shipbuilder Uljanik plunged back into crisis
In happier times: the Willem van Rubroeck, a self-propelled cutter suction dredger built by Uljanik shipyard, being launched into the sea in August 2017.
By Carmen Simion in Bucharest September 4, 2018

Troubled Croatian shipbuilder Uljanik said on September 4 its accounts have been blocked again. The announcement came after the company lost four vessel construction deals due to its inability to deliver the vessels according to contract stipulations.

The crisis at Uljanik Group, which owns both Uljanik and 3. Maj shipyards, seems to be deepening since its workers went on strike over unpaid salaries on August 22. The strike ended on August 31 as the workers started to receive their July wages, after the government secured the funds for unpaid salaries by increasing its state guarantee for previous loans issued to Uljanik in 2015 and 2016.

However, the announcement that two companies of the SIEM Group, Automarine Transport and Siem Shipping, have unilaterally cancelled contracts for the construction of four vessels will only worsen the financial situation of the Pula based shipyard.

“Since launching there have been significant delays and increasing uncertainty about the builder’s ability to deliver the vessel within an acceptable timeframe. The company has therefore decided on the 1st September 2018 to cancel the vessel. The three remaining vessels in the series (hulls 515,524,525) are also heavily delayed. The company has therefore exercised its option to cancel all remaining vessels to be built by Uljanik,” SIEM said in a statement.

Uljanik started out back in 1856 as the main naval base of the Austro-Hungarian empire, building and repairing warships. Rebuilt after the Second World War, it started building giant tankers and other very large ships in the 1960s, later specialising in car carriers as well. Since the beginning of the 21st it has entered new niches including complex newbuildings. The region’s second biggest shipyard, the 3 Maj shipyard in Rijeka was integrated into Uljanik group in 2013. 

Despite its efforts to enter profitable new niches, the shipyard was reported earlier this year to be in crisis. In January, the European Commission cleared Zagreb’s plans to grant the shipyard a state guarantee for a €96mn loan, allowing Uljanik to meet its urgent liquidity needs while preparing a restructuring plan. This prevented the shipyard going out of business immediately, the EC said at the time.

In March, Uljanik chose Kermas Energija as strategic partner in its recapitalisation process. The Uljanik Group is now awaiting a decision from the European Commission on its restructuring plan.

However, there has been speculation in local media that the government is looking for a strategic partner other than Kermas Energija for Uljank. The owner of Kermas Energija told Hina news agency in an interview that if Uljanik had changed its mind and wanted another strategic partners, he would withdraw and set no other conditions than the repayment of a €1.26mn loan his company had given to Uljanik.

Meanwhile, the anti-corruption police, Uskok, have started a preliminary investigations at the Uljanik Group, according to news portal Total Croatia News.

Uljanik Group posted a net loss of HRK364.8mn (€50mn) in the first half of the year, triple the HRK113.2mn loss the same period last year.