Friday, 19 August 2022

Enfeebled Brodosplit to Construct Expensive Vessel for Storylines

August the 19th, 2022 - The Brodosplit shipyard is continuing to face significant problems, but it seems that a saviour has come at the last moment in the form of a contract between the famous Dalmatian shipyard and the American Storylines company. Debeljak's troubled company will build the massive vessel, the estimated retail sales value of which stands at US $1.5B

As Poslovni Dnevnik/Marija Brnic writes, Brodosplit is currently suffering the fate of both the Uljanik and 3 Maj shipyards in the form of attracting negative attention with press reports about the pre-bankruptcy process of its companies. Despite the fact that Brodosplit's employees had been sent home, it seems the company will now be able to breathe a sigh of relief.

The story that Brodosplit could participate in the construction of the first so-called residential cruise ship with 547 apartments is the absolute last thing anyone could have ever possibly expected in the current uncertain situation. It seems suspicious that the Americans would sign a contract to build a ship of that size and cost. While many raise their eyebrows in disbelief, it has come to light that this fantastic piece of news is indeed true. According to the press release provided by Storylines from Miami, the contract with Brodosplit has already been signed.

Brodosplit will build a 232.5-metre-long Narrative ship in the City of Split, which, according to the press release, will be the first fully ecologically sustainable ship, and should be delivered in 2025.

"We're delighted to be partnering with such a respected European shipyard that has a long history of building high-quality passenger ships," said Storylines CEO Alister Punton. According to him, the ship will provide its residents with the comfort of home. It differs from other cruisers in that it is intended for the complete life of residents at sea. It will also boast a post office, a school, a library, a hospital, a bank, swimming pools, business premises and about 20 different catering facilities. It will also be the largest wellness centre at sea in the world with its own gardens, farms and space for several types of sports and recreation on board.

For more than understandable reasons, Brodosplit has been very brief in its communication about the construction of the ship. Everything, they say, was said in the Storylines press release, which also includes Tomislav Debeljak's statement.

"We always enter into projects that bring about the development of the industry and the inclusion of new technologies. This ship is energy efficient, with two types of propulsion (diesel and liquefied gas) and will be optimised for the lowest possible emission of greenhouse gases," Debeljak said in his statement.

Their American partner, therefore, still believes that Brodosplit is a good choice for a partnership, and the second question to now keep in mind is how the Croatian Government will behave, given that Brodosplit needs an advance guarantee to get things moving.

For more, make sure to check out Made in Croatia.

Friday, 15 April 2022

DIV: Account Blocked Because of Financial Support to Brodosplit Shipyard

ZAGREB, 15 April (2022) - DIV's financial support to the Brodosplit shipyard due to the problem with the refinancing of loans from the VTB bank and the moves by suppliers are the reasons why DIV's account has been blocked, this metal processing and shipbuilding group told Hina on Friday.

It said that the loans from VTB, a bank owned by the Russian state, could not be drawn in full because of sanctions imposed on Russian banks following the Russian military invasion of Ukraine.

"That is why the financing of Brodosplit's two largest projects has been halted, and DIV has financially helped Brodosplit so that these projects would not stop," DIV said.

"We have invested €60 million of our own funds in the two projects, instead of 30 million as planned, and that has financially exhausted us. This lack of financing and our public announcement of the problem of force majeure prompted some of our suppliers to request payment of their claims, both due and not due, which has resulted in the blockade of the accounts of the DIV Group and Brodosplit," DIV told Hina.

It added that the group's total debt to external suppliers amounted to "about three weeks' worth  of their turnover", but that this force majeure problem has been going on for eight weeks now and they lack financing.

"Unfortunately, what we feared might happen has happened. DIV is a large and strong company with a large profit and large capital, so this force majeure that occurred will not much affect our operation," the group said.

Brodosplit said two weeks ago its access to €60 million had been blocked because it was financing the construction of two vessels with money from VTB Europe, a Russian-owned bank based in Frankfurt.

Asked what steps they were taking to have the blockade lifted and about talks with the Croatian Bank for Reconstruction and Development (HBOR) to secure a loan for Brodosplit, DIV said that they were "in intense communication" with the HBOR. "In case of a quick and positive outcome, Brodosplit would finish the ships in time, pay back the loans and the state guarantee, everyone would make a profit, and jobs would be preserved in this important export sector."

Only part of the VTB loans drawn

The group also commented on Finance Minister Zdravko Marić's statement on Thursday that it was not clear how the VTB loans could have affected Brodosplit's liquidity and how the sanctions against Russia could have had such an adverse effect on Brodosplit.

"The loans have been mainly used... one of the two ships concerned has even been completed," he said.

DIV said Marić was right that one ship was practically completed and the other nearing completion, adding that "about €500,000 is needed for the first one and about €8 million for the second."

DIV said the minister was partly right that that loans had mainly been paid out, adding that this is the key problem at the moment.

The two projects cost €150 million and Brodosplit planned to invest €30 million in them, DIV said, adding that the remaining €120 million had to be borrowed from VTB, of which €82 million has been paid out.

Since another €8.5 million is needed to complete the ships, Brodosplit invested an additional €29.5 million in the project for a total of €59.5 million, DIV said, adding that the restrictions imposed on VTB due to the war in Ukraine prevented the payment of the remaining €38 million.

As a result, Brodosplit and DIV had to spend an additional €29.5 million besides the €30 million already invested in the project, DIV said.

The fact that the ships are nearly finished is a strong argument for approving a loan, because the return risk is minimal, it said, adding that Brodosplit is not asking for aid but a commercial loan to finish the ships.

DIV said it was true that Brodosplit had been restructured with HRK 1.5 billion, approved by the government and the European Commission to cover its losses, and that DIV committed to covering HRK 140 million of the losses over five years.

Until 2010, Brodosplit had cost the state HRK 20 billion, while costing it nothing over the past ten years, since DIV acquired it, DIV said, adding that DIV and Brodosplit have paid HRK 3 billion into the state budget, HRK 3 billion to workers for wages and HRK 9 billion to suppliers.

For more, check out our business section.


Monday, 4 April 2022

Croatian Shipbuilders Wanted At Sibenik's Iskra Shipyard

April the 4th, 2022 - Croatian shipbuilders are wanted once again as six boats intended for the Ministry of Health are set to be constructed in one famous Sibenik shipyard.

As Poslovni Dnevnik/Suzana Varosanec writes, with the start of work on a multi-important newbuild, marked by a recently held ceremony at Iskra brodogradiliste 1 in Sibenik, accelerated production will obviously follow. The first in a series of six fast ambulances for the Croatian Ministry of Health will be delivered from these Sibenik halls this September.

All of the above is possible thanks to the circumstances in the field of strategic management specific to both the owner and the aforementioned shipyard's administration, because all the necessary materials for the construction were procured, and the equipment was ordered on time.

All six boats will be able to be constructed on time without any problems, although there are unforeseen factors on the market that affect the dynamics of many projects due to a significant increase in material prices or shortages.

The need for Croatian shipbuilders is finally growing once again

Aluminum for the boats is already in stock, and the material won't be an obstacle to the execution of the works within the agreed deadline of autumn 2023, which is important because the project is being co-financed with EU money. All of the Ministry of Health's boats will be built in Sibenik, and when it comes to the community of bidders, part of the work is being performed by Pula's Tehnomont.

The dynamics of the first delivery in the implementation of the project ''The establishment of an emergency maritime medical service'' is important for a country with more than a thousand islands, both for the island populations and for many tourists, according to prominent Slovenian entrepreneur Dusan Sesek, under whose ownership the Slovenian company Iskra first took over this Sibenik company and the Zagreb electric cable manufacturer Elka.

Here in the Republic of Croatia, the Slovenian group today employs a total of about 400 people, but the need for more and more Croatian shipbuilders in the course of these works is only growing.

"All of the moorings are full, there are orders for 2022 and part of 2023, so the biggest problem in the Sibenik shipyard is an insufficient number of Croatian shipbuilders," said Sesok, explaining that in addition to 170 workers in the shipyard and another 50 subcontractors, there is a real need for around another 30-50 people, with Croatian shipbuilders and welders currently the most lacking.

Turnover grew by 30 percent

This particular shipyard has had both a tradition and a high level of significance in Sibenik since 1905, today with workshops spanning 45,000 m² and indoor halls covering 2000 m² intended for ships up to 70 metres in length, as well as an operating space for servicing vessels spanning 10,000 m². In 2022, the plan is to earn about 25 million euros in revenue, and a modernisation of about 10 million euros is underway.

After moving to the new administrative building, the company is now completing the extension and renovation of the former, where there will be accommodation for about 100 foreign workers, half of which is planned for seasons in tourism. In the first two months of 2022, Iskra's turnover increased by 30 percent and, according to Sesok, the plan for the total revenues of the group this year to stand at a massive 300 million euros.

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

Saturday, 31 July 2021

US Sixth Fleet Command Ship Visits Split

ZAGREB, 31 July 2021, 2021 - The command ship of the United States Sixth Fleet, USS Mount Whitney, is visiting the southern Croatian Adriatic city of Split, and its commander said on Saturday that the US-Croatian partnership on land and at sea is crucial for the military cooperation and common security of the two countries. 

The US vessel arrived on Friday and visited the Split shipyard, while reporters were invited to visit the ship on Saturday.

US Chargé d'Affaires Mark Fleming said they were glad to be in Split and that the defence cooperation between the United States and Croatia was the corner stone of their bilateral relations.

Over the last 10 years, US military aid to Croatia has reached nearly HRK 4.5 billion, which is more than $700 million, for training, equipment, infrastructure building and specialised military training, Fleming said. Since Croatia joined NATO 12 years ago, US and Croatian personnel have served together from Afghanistan to Iraq to Kosovo. The US-Croatian partnership on land and at sea is crucial for the military cooperation and common security of our two countries, he added.

US naval ships often stop in Croatia for maintenance and mutual security operations. The northern port of Rijeka has been the centre of US-Croatian cooperation since 2011, benefiting from contracts with the US Navy worth nearly HRK 900 million. This year three US naval ships have been berthed in the Kraljevica shipyard for regular maintenance.

In April, US Navy EOD (explosive ordnance disposal) divers held a training course on humanitarian mine clearance for Croatian Navy personnel and launched a project to develop an EOD training facility for the Croatian Navy.

Vice Admiral Gene Black, Commander of the US Sixth Fleet, said that Croatia stands as an important NATO ally, facilitating the maintenance of US Navy forward deployed ships.  

Croatian shipyards are world class, and mine action capabilities ensure a continued maritime presence and security in the whole region, Black said.

Dave Pollard, Commander of USS Mount Whitney, said that the US-Croatian military cooperation and sharing the same values brings stability and prosperity to this region.

After the visit, USS Mount Whitney will begin a two-week scenario-driven integrated exercise that will provide high-end training at sea and ashore against a challenging adversary force.

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Wednesday, 1 May 2019

Marić on Potential Chinese Investment: Too Early to Talk About Anything

As Poslovni Dnevnik writes on the 30th of April, 2019, Croatian Finance Minister Zdravko Marić said on Tuesday that he still needs to see if there really is specific interest from the Chinese shipbuilding company, whose representatives are visiting the ailing shipyards in Pula (Uljanik) and Rijeka (3 Maj), saying that it's too early to be able to say anything and that we "need to be completely realistic".

When aked by a journalist about the expectations of the Croatian Government, given that a delegation from the Chinese shipbuilding company China Shipbuilding Industry Corporation (CSIC) has visited the Uljanik and 3 Maj shipyards, Marić said that first of all, we should be realistic and after CISC's representatives get a proper look at the state of affairs with those shipyards and answers to the questions they are interested in, we will need to wait and see what their response to all of it will be.

At this point, it's still too early for that, he added, recalling yesterday's introductory meeting between the Croatian prime minister, his ministers and the aforementioned Chinese delegation at Banski Dvori in Zagreb, where everything was transparent and very clearly presented.

"A really high level team from the perspective of that company has arrived, but on the other hand, we need to be completely realistic. So, today they will spend all day in both Rijeka and Pula and then after that, of course, we can't expect it immediately but within a reasonable time frame, they'll determine what they saw, state what they think about it, and whether or not there is a certain level of interest,'' said Marić when answering journalists' questions after attending the annual European Investment Bank (EIB) press conference.

The CSIC delegation, headed by Hu Wenming, arrived at the enfeebled Uljanik on Tuesday morning, where talks with the members of Uljanik's management board and its supervisory board took place. Assistant Minister of Economy Zvonimir Novak has also been participating in these talks.

Several representatives of the aforementioned Chinese company arrived at Uljanik as early as Monday afternoon, where they viewed the plants and made an unofficial assessment of the capabilities of the Pula shipyard's production facilities, ie, they got better acquainted with its technical capabilities, the processes that take place there, the technology and its general capacities.

What will coe of the visit is anyone's guess so far, but despite suspicion from some, an injection of Chinese money could truly be Uljanik's very last hope.

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