Third Time’s the Charm for Kraljevica Shipyard

The Croatian Government decided today to proceed with the third round of privatization of the Kraljevica Shipyard, announcing a tender for the sale of 99.54 percent of Kraljevica’s shares under special conditions, for one kuna.

In the second round of privatization, there were no offers for Kraljevica, but since then there has been constant interest from several potential bidders, said Minister of Economy, Labor and Entrepreneurship Đuro Popijač at the Government session. He explained that it was agreed with the European Commission that additional efforts could be made for Kraljevica, either through direct negotiations with potential bidders or through a new tender. We decided to announce another round of the tender, said Popijač, who expects that this will reveal the actual interest of six potential bidders who have shown significant interest in the Kraljevica Shipyard. By the Government’s decision, the Croatian Privatization Fund (HFP) is tasked with publishing a public call and the process of collecting bids for the sale of 893,150 shares of Kraljevica for one kuna. The deadline for collecting bids will be 15 days, and this tender will also require potential buyers to submit a restructuring program, with a 40 percent contribution from investors in the total restructuring costs, etc.

The Government also gave its consent today to the proposal of an agreement on the regulation of property-legal issues between the state and the Pula shipyard Uljanik, which is also one of the prerequisites for Uljanik to be excluded from the package of shipyards in difficulty. We managed to convince the European Commission that Uljanik has implemented a restructuring program, but the issue of illegal subsidies and obligations that Uljanik cannot repay remains, although there is a compensation model for the seized maritime property, explained Popijač. The agreement thus allows the state and Uljanik to offset (compensate) mutual claims – for the state, it concerns compensation for the seized maritime property amounting to 1.03 billion kuna, while for Uljanik it concerns loans with state guarantees of 59.7 million euros (or 436.8 million kuna) and nearly 600 million kuna in paid state subsidies increased by default interest from March 1, 2006. After the return of state subsidies, which will be enabled by the realization of the agreement, Uljanik will no longer be in the status of a company in difficulty, and it will be allowed to operate under the conditions applicable in the European Union, states the explanation of the agreement. (H)