3. maj and MKM Yachts Sign a 10-Year Subconcession and Cooperation Agreement

Representatives of Shipyard 3. maj and MKM Yachts, a company operating within the Australian Scenic Group, signed an agreement on Thursday whereby 3. maj grants MKM Yachts a 10-year subconcession on part of the maritime property in the special purpose port, specifically a subconcession on part of that Rijeka shipyard.

In addition to the subconcession agreement, both parties also signed a 10-year business cooperation agreement on Thursday.

This is about operationalizing the agreed cooperation with the Australian Scenic Group, which is building the first of five luxury cruise ships at the Rijeka shipyard, with plans to build four more, with a total value of 860 million euros.

The subconcession was requested by 3. maj, and the Government has given consent for MKM Yachts to be issued a subconcession on 21,493 square meters of area, for a period of 10 years, with a subconcession fee equal to the concession fee.

Minister of the Sea, Transport and Infrastructure Oleg Butković emphasized during the signing of the agreement that the Government gave consent in June so that the subconcession agreement for part of 3. maj could be signed today, which would mean having two shipyards at two locations, interconnected. This is yet another in a series of positive decisions made by the Government in the past year to revive, operate, and advance 3. maj, he added.

"We still have guarantees to be issued. The Government has made a conclusion and intention to do so, so we expect that these guarantees will be issued very soon, so that both production and 3. maj can go in a positive direction," Butković stated. When asked by journalists when the state guarantees would be issued, he replied "after the elections, for sure."

Director of 3. maj Edi Kučan stated that contracts have been signed with the company with which they will develop the niche of passenger polar ships together in the coming years. "At the location of 3. maj, we will practically have two shipyards that will be intensively interconnected and will utilize all available resources to ensure that costs are minimal, so that both can be competitive in the global market," he said.

Kučan explained that regarding the subconcession, it pertains to part of the equipment basin, berths 2 and 3, and that the financial conditions, i.e., the concession fee, are the same as in the concession. He added that in the bankruptcy of the Uljanik Group, part of the space remained with 3. maj, which is also being commercialized through subconcession agreements to reduce costs.

Director of MKM Yachts Saša Čokljat assessed that an important step has been made for the continuation of the construction of the Scenic fleet. He emphasized that government and local government support is crucial for such projects, thanking everyone. In response to a journalist’s question, he stated that the laying of the keel for the first of five polar cruise ships depends on the closure of the ship’s financial structure.

The Scenic Group, or its company PEC Limited, has already built a ship with similar characteristics, the luxury polar cruiser "Scenic Eclipse," at the bankrupt Uljanik in Pula. That ship has been successfully completed, has sailed around the world, and is now docked in the Rijeka port due to the Covid-19 pandemic.

In June, the Government adopted a conclusion expressing its readiness to engage in the process of issuing state guarantees for Brodotrogir Cruise, Uljanik Shipbuilding 1856, and MKM Yachts.

In the request for the issuance of a state guarantee for the construction of a ship contracted by MKM Yachts from Rijeka with the buyer PEC 2 LIMITED from Malta, it concerns securing a loan in the total amount slightly exceeding 100 million euros, covering 80 percent of the loan obligation, or 80.13 million euros. Such a state guarantee will not be considered illegal state aid, and it would be activated in phases, so that the maximum exposure of funds from the loan guaranteed by the Republic of Croatia at no stage of the ship’s construction may exceed the relevant amount of a maximum of 64 percent exposure by the end of 2021, after which the exposure of the Republic of Croatia should fall to a maximum of 48 percent.

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