Croatian shipyard files for provisional bankruptcy

A serious financial crisis has hit the Croatian shipbuilder Brodosplit due to the loss of Russian construction loans that were blocked by sanctions following the invasion of Ukraine. As a result, the yard has filed for provisional bankruptcy and is trying to find a solution to the situation. Croatia’s largest industrial employer, Brodosplit is part of the DIV Group which acquired the shipyard in 2013. The group is valued at €490m and comprises around 80 companies across eight industrial areas and employs some 3,200 people.

In January this year, the yard received an order for a 125m (410ft) superyacht due for delivery in 2025. The nationality of the owner is unknown but market speculation suggests it could be Russian. The yacht would be among the largest in the world, with accommodation for 12 guests and 50 crew. When the order was announced it was stated that the superyacht would include “extravagant” features and that, together with a second vessel that Brodosplit was recently commissioned to build, the two contracts would generate €200m for the company. In respect of the loss of Russian construction loans, the Brodosplit management have said that efforts are being made to arrange bridging finance possibly through the Croatian government. 

The shipbuilder has two commercial projects in its order book for which loans of €150m were required. DIV was able to provide €30m, with the remaining €120 being taken in loans from Russian bank VTB. By the end of March, €82m of the loans had been drawn down from the bank before sanctions were imposed, cutting off the payment of the remaining €38m.

In a bid to address the situation, DIV tried to provide additional funding to support the yard and the orders, seeking help from the Croatian government to see if some bridging funds could be allocated. Brodosplit has pointed out that one of the two contracts is nearly completed and could be finished with a further €500,000. The second contract is said to require another €8m to complete.

Discussions between the Croatian Bank for Reconstruction and Development (HBOR) to secure a loan for Brodosplit have been underway with DIV but as yet no response has reportedly been received from the government.

“I hope they didn’t give up on us,” a director of Brodosplit told Croatian media over the weekend. “We will survive with or without the government,” adding that without the loan the company would be in a serious situation.

It is understood that some workers have not been paid for several weeks and promises of help from the Agency for the Protection of Workers have apparently not provided any cash. Some 600 employees continue to work at the yard, but another 1,500 have been on furlough since last month.

Source: IBI News