Brodosplit gets into financial trouble after losing Russian construction loans

Brodosplit gets into financial trouble after losing Russian construction loans

The Croatian shipbuilder Brodosplit has filed a provisional bankruptcy statement as it seeks to resolve a financial issue brought on by EU financial and banking sanctions against Russian firms. The shipyard and its parent company, DIV Group, say that this is not an operating issue, but rather a lack of construction funds and the inability to complete a bridge solution. financial assistance from the government

DIV first intervened to provide more financial assistance, but they eventually resorted to the government to provide a bridging loan to the shipyard to fund the completion of the two ships. DIV claims that sponsoring the shipyard helped it grow financially.

Brodosplit’s problems began in early April, when the EU tightened financial sanctions against Russia, including VTB, a Russian-owned bank and credit network that is primarily state-owned. Brodosplit is now working on two commercial projects that will cost 150 million euros ($ 159 million). DIV offered to provide 30 million euros, and the shipyard borrowed 120 million euros from VTB. When Russian loans were barred as part of sanctions, the shipyard withdrew 82 million euros from them in March. VTB was unable to pay the remaining 38 million euros due to restrictions imposed by the Ukrainian conflict.

Brodosplit reports that work on one of the two projects is nearing completion and estimates that it could be completed with an additional € 500,000, while the second project requires approximately € 8 million to complete the ship to be delivered. at the end of the year.

“I hope they haven’t given up on us,” a Brodosplit director told Croatian media over the weekend. “We will survive with or without the government,” he said as he said the company, however, would be “paralyzed” without the government loan. He stressed that some workers had not been paid for weeks and although there were promises of help from the Workers’ Protection Agency, nothing had been received. Some 600 employees have been working at the shipyard since last week, most on coastal patrols for the Ministry of Defense and another new building, but most of the 1,500 employees have been laid off since production ceased in April.

DIV reports that it has held intensive talks with the Croatian Bank for Reconstruction and Development (HBOR) to secure a loan for Brodosplit, but has not received a response from the government to its proposal. He emphasizes that a grant is not requested, but a loan.

There was a rumor that a solution had been found with the government, but last week the finance minister said the situation was still being analyzed due to the technical, legal and financial implications of securing the shipyard’s request. The shipyard notes that it was profitable in 2021, but that its financial situation is complicated by EU restrictions. The courtyard was privatized by the government to comply with EU restrictions when the country joined the EU in 2013 and the government is now unsure of the level or form of support it is allowed to offer.

In April, unpaid company suppliers asked the court about the conditions for filing for bankruptcy. However, the shipyard and its parent company filed a pre-bankruptcy petition to delay any creditors’ action, citing claims against Croatia and ongoing talks with the government. Last week the company was forced to resubmit due to an omission in the first filing, while the minister said the filing was complicating an already complex situation.

Brodosplit is not the only shipping company that has been caught in the impact of sanctions. In Norway, Havila Kystruten had arranged to rent its cruises to the Russian financial company GTL, which was also included in the April EU sanctions. Havila’s first cruise, Havila Capellawas temporarily suspended due to issues related to your insurance and ownership of the Russian company, while the shipyard offered a bridge loan so that Havila could receive its second cruise. The company is working on refinancing while seeking exemptions from the Norwegian government.

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