Tuesday, 14 March 2023

Croatian Jadroplov Fleet to be Boosted With Another Vessel

March the 14th, 2023 - The Croatian Jadroplov fleet is set to be boosted with yet another vessel which will sail under the Croatian flag after having been given the green light from the government.

As Poslovni Dnevnik/Marija Brnic writes, yet another vessel for the transport of liquefied petroleum gas (LPG) will soon sail under the Croatian flag - a part of some new reinforcement of the Croatian Jadroplov's fleet. The Croatian Government recently approved the purchase of another vessel with HBOR, making it the second in less than one year.

It's important to emphasise that this doesn't act as an actual guarantee for the loan, and it is merely an approval, which is necessary since it is a company majority-owned by the state and with a debt of more than one million euros. More specifically, we're talking about loans in the amount of 15.2 million US dollars, with a repayment period of 10.5 years and a grace period of six months, and with an interest rate of 6.48%.

Cooperation with the Japanese

For this Split-based shipping company, this is an additional spring in its step pushing it back up from the bottom it has unfortunately been stuck in in for years now, and the government will still continue to provide it with insurance and credit for the implementation of its entire financial rehabilitation.

All of this is a prelude to the announced recapitalisation, which should strengthen Jadroplov and see it go from 150 million kuna to 350 million kuna. According to the announcement of the President of the Management Board of Jadroplov, Ivan Pavlovic, the recapitalisation would also provide a basis for continued cooperation with the Japanese shipyard where the two LPG ships, named Marko Marulic and Vis, have been constructed so far, with the plan being that future ships will be able to transport other types of cargo that require cooling.

Although doubts have already begun to appear about the realisation of the recapitalisation, Pavlovic has confirmed that it is being worked on, InterCapital has been engaged, and it will be realised in the typical way, with the issuance of a prospectus and with the approval of Hanfa, the announcement of a public offer and the listing of new shares on the stock exchange.

"We're going forward with the recapitalisation this year", Pavlovic explained, who has been visiting investors for a long time and talking about their involvement in this big undertaking for Jadroplo. Most of all, he says, he wanted pension funds to be involved, but they made it clear to him that they weren't interested in investing in such a volatile activity.

The ideal investors for Pavlovic would be, for example, INA, and he's prefer Croatian shippers, but due to the weak interest in the domestic market, Pavlovic is also talking to people abroad, including shippers in Greece and Turkey, and he is currently going as far as to Japan for talks.

"This is a good model for Jadroplov, because shipping has almost disappeared in Croatia and Split, and with the ongoing modernisation of the Croatian Jadroplov fleet and turning to other niches, trust is gradually returning," said Pavlovic, who hopes that others will recognise this and participate in the recapitalisation process. In addition to entering a new business with LPG, Jadroplov intends to further disperse its business, and their ambitions are turned towards ferry transport.

The already prepared project, for which the ship's builder, the 3 Maj shipyard from Rijeka, has been selected, will apply to the tender for non-reimbursable EU funds intended for the development of green technology, and it regards an electric ferry worth 50 million euros. The ship would carry one thousand passengers and 150 cars and would be the first electrically powered ferry of its size in all of Europe. This project is also a way to send out the message to investors that the new Jadroplov has transformed for the better.

A good couple of years

Over the past two years, Jadroplov operated with a profit, in 2021 more than 100 million kuna was realised, which covered losses from earlier years, and according to the first unaudited data for 2022, 87.4 million kuna was realised. However, the company is troubled by its old obligations, and because of that, it requested and received approval from the government to extend the repayment of the remaining obligations for the loan taken back in 2016 for the sake of financial stability.

Due to the moratorium that was made possible during the coronavirus pandemic, at the end of March, a total of 3.95 million US dollars of principal has to be paid, which Jadroplov will pay out over the next three years. In the meantime, the recapitalisation should ensure further safe navigation for this Split-based company and the new vessel joining the Croatian Jadroplov fleet.

For more, make sure to check out our dedicated business section.

Wednesday, 9 February 2022

First in Croatia: Jadroplov Electric Ferry Could Sail in 2024

February 9, 2022 - The Jadroplov electric ferry, the first large Croatian ship to transport 1,000 passengers and 156 cars without the emission of harmful gases, could sail in 2024. 

Sometime in the spring, the construction of an electric ferry could begin in one of the Croatian shipyards. It would be the first of its kind in Croatia - without harmful gases. The project documentation is nearing completion, with all calculations and model tests.

The prototype was designed by the Split company "Classis." Predrag Čudina, a ship designer with forty years of experience, told Slobodna Dalmacija more. 

"The ship will be built for Split's "Jadroplov," with which we have signed a contract for the development of the project. So far, several electric boats have been built in Croatia, but we are talking about the first large Croatian ship to transport a thousand passengers and 156 cars, or about twenty buses and trucks and 89 small vehicles. It is a closed ferry. For the sake of comparison, it is bigger than "Petar Hektorović" from Jadrolinija's fleet."

When can we expect to see it in action?

"The project should be ready for the shipyard already in March. And it usually takes two years to build a prototype. So, "Jadroplov" could have this ship as early as 2024 if there are no problems with shipbuilders' contracts, and we are counting on domestic shipyards."

How much would this ferry cost?

"It is difficult to project, but roughly 30 million euros."

Which lines would it run?

"All lines to the central Dalmatian islands, equally those closer and further away, such as Vis or Korcula, not to mention Hvar, Brac or Solta. Of course, it can be done in any other area, but this is the closest to us. For example, the line from Split to Supetar or Rogač can be maintained six times a day in both directions without recharging the battery station. Or, three cruises a day between Split and Stari Grad, or twice to Vis or Vela Luka and back. All with one night charge, since there is less load on the electricity grid at night, and electricity is cheaper."

Where would the ferry charge?

"The port of Split has a capacity of about ten megawatts, which would be enough to charge three ships at night. Then, of course, a filling station should be built, which should not be a problem in Split, given the existing capacity of the network. Then, finally, three or four megawatts of power should be provided for islands, equivalent to the power needed for 400 households. So it’s not something that should be a problem at night."

How much does it cost, and how long would it charge?

"24 or 25 megawatts are consumed during the day. This means that if we want to charge the batteries in five hours, we need to have a five-megawatt port. If we charge it for eight hours, then three megawatts of power is enough."

There is no filling station at the ports. Who would build them?

"Preparatory meetings are already taking place; State bodies, the County Port Authority, and the Split Port Authority are also seriously interested in constructing these stations. So naturally, it counts on financing plants with European money."

What is the projected capacity of the batteries?

"We have decided for a larger capacity battery. It is more expensive but extends battery life. Today's lithium-ion can withstand six or seven thousand charge and discharge cycles, or twenty years. If you charge it once a day, the battery will be good for two decades. Charging it five times a day will shorten its life to five years. It is also important that the ferry is completely autonomous during the day and can be tied to any berth in Split. It doesn’t have to go to one that has a charging port."

What are the advantages over a classic ferry?

"The advantage is zero gas emissions, which is imperative today. And the math is good: lithium-ion battery plants have become ten times cheaper in the last ten years, so today, their price is roughly comparable to the cost of a diesel marine plant. Moreover, they usually come from China or Korea. So, this electric ferry should not be more expensive than the classic one. And the price of a night kilowatt-hour of electricity is up to three times cheaper than a kilowatt-hour from a diesel engine.

In short, for the same sailing speed, the cost of propulsion energy will be several times less than a comparable diesel ship. Of course, maintaining an electric drive is simpler and cheaper than diesel, but it is also less often needed."

How will the islanders accept an electric boat?

"Here are the arguments: passengers will come to the island or the coast faster and more comfortably. The speed of the ferry is about 15 knots in service. There will be no exhaust on the sun deck, it will have air-conditioned saloons, a bow and a stern ramp for vehicles, so there will be no need to maneuver on board, which is time-consuming. The garage will not be below the main deck, but on it, with two platforms on the side, and there will be no vehicle entry under the deck.

The voyage to Supetar will be fifteen minutes shorter and to Stari Grad up to half an hour, compared to the ships that now maintain these lines. Even bad winter weather should not affect navigation. It has been designed with two swivel stern propulsors and one bow thruster, which allows it to have decisive maneuverability."

Where else are these ships built?

"In Scandinavia: Denmark, Norway, and Sweden when we talk about Europe, but also in Japan. This niche market will be further developed, especially concerning environmental directives on reducing greenhouse gas emissions. So why not be a part of it: to have our projects and shipyards that can build such ships for domestic and foreign clients."

Is there money for such projects?

"The recovery and resilience plan, which we hear so much about, probably assumes that the allocated European money in Croatia will be spent on the recovery of the Croatian economy. The current recovery plan includes purchasing three passenger ships and three double hulls. It would be natural for them to be built on Croatian slipways and for some domestic shipyards to master the ability to construct double hulls. To employ our capacities, not just buy abroad.

State Secretary at the Ministry of the Sea Josip Bilaver said at the celebration of Seafarers' Day in December last year that the European Commission will not allow the spending of the mentioned money to construct ships that have harmful emissions. Therefore, diesel or hybrid drives would not be considered."

For more, check out our lifestyle section.

Tuesday, 17 December 2019

Is Agreement With Germans New Chance for Croatian Jadroplov?

As Jadranka Dozan/Poslovni Dnevnik writes on the 16th of December, 2019, Croatian Jadroplov has a new opportunity for a "restart" ready and open for it. Last week, the shipping administration, 70 percent of which is owned by the state, reported that they had reached an agreement with Norddeutsche Landesbank in Hanover, after months of negotiations, agreeing that the creditor would agree to write off 40 percent of the claims lodged against Croatian Jadroplov's companies. Norddeutsche LB is ready to write off all of the claims for a minimum of 28 million US dollars.

In order to confirm the agreement, some conditions have to be fulfilled, among which the resolution of Croatian refinancing stands out. But for a this shipping company from Split as a loser in this game, with a financial position that is not very “bankable”, this is not an easy piece of homework at all. The state development bank, HBOR, should offer to lend Croatian Jadroplov a hand.

Deadlines are also important throughout the story of settling things up with the Germans, so the weeks ahead may prove to be crucial. Jadroplov's management, headed by Branimir Kovačić, believe that in the negotiated "forgiveness" procedure of significant parts of the debt, they have a solid argument in the discussions on domestic (re) financing.

If we take a look at the market value of Croatian Jadroplov's assets and the liabilities that will remain after the settlement is completed into relation with one another, the company does actually return to the positive capital zone, and that significantly improved financial picture also makes a long-planned capital increase more likely. There is also a plan which was approved by the European Commission last May, confirming that the business plan was made in accordance with European state aid rules.

The plan provided for aid of 105.6 million kuna, which mostly consists of bank guarantees for refinancing existing liabilities, but with a significant own contribution to costs.

The plan also envisaged refinancing home loans with 8 million dollars of credit, which, with 50 percent government guarantee coverage, would be covered by collateral for the remainder. In this regard, the Croatian Government had also made a decision to grant a guarantee of 24.3 million kuna for a loan of 48.5 million kuna, but so far it has not been possible to realise that move. Whether or not that will happen soon remains to be seen. From Croatian Jadroplov, they hope that there will be those willing to listen for the sake of preserving the business. Among other things, about 600 million dollars in remittances through the salaries of seafarers enter Croatia every year, and a considerable part comes through Jadroplov's ships.

Back in early 2016, at the height of the freight crisis, Nord LB extended its hand to Jadroplov in its fight for survival. It returned three million dollars of deposits as collateral.

Due to the crisis in this highly cyclical type of business, Norddeutsche LB itself is in the process of restructuring, and it announced back during this summer that it was ceasing to re-lend to the sector, or restructure its existing loans.

At the same time, it sold 2.6 billion euros in shipping loans to the Cerberus Financial Fund. For both the bank and for Jadroplov, reaching a deal is a more cost-effective solution and closing claims is also more cost effective than enforcing collection by stopping ships, says Kovačić.

The seizure process is time-consuming and extremely expensive, and through auctioning, prices are well below market levels, he explained. For Croatian Jadroplov, on the other hand, pre-bankruptcy proceedings simply aren'y an option, as this would, de facto, mean total bankruptcy.

Overall, Jadroplov points out that Nord LB has always been a decent business partner and coming to an agreement would certainly improve not only relations between the two but business for this Croatian company.

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