September 5 (SeeNews) - The Croatian government said on Thursday it will sign an agreement with local shipyard 3. Maj on postponing the repayment of its claims against the troubled company in order to help it revive production.
The agreement is part of a government initiative to provide state guarantees on a 150 million kuna ($22.4 million/20.3 million euro) loan to 3. Maj to help it restart production and complete vessels already under construction.
The loan will be provided by the Croatian Bank for Reconstruction and Development (HBOR) under the condition that the shipyard reaches an agreement with all creditors to postpone until September 1, 2021 the repayment of their claims for unpaid debt.
To this end, transport minister Oleg Butkovic was authorised on Thursday to sign an agreement with 3. Maj on the new debt repayment model, under which the shipyard will repay 15% of its outstanding debt to the state budget within 30 days after withdrawing the HBOR loan, the government said in a statement after a regular cabinet meeting.
The model for the repayment of the remaining 85% will be additionally determined by August 31, 2021 at the latest, the statement said.
3. Maj's overdue debt to the government, arising from unpaid concession fees, stood at 5.86 million kuna as of August 30, 2019, including 420,000 kuna interest.
Earlier this week, economy minister Darko Horvat welcomed the news that more than 90% of 3. Maj's creditors had agreed to get paid only 15% of their claims against the shipyard from the HBOR loan and to wait two more years for the repayment of the remaining 85%.
The shipyard announced earlier on Thursday it had signed a deal to revive a shipbuilding contract with Canadian shipping company Algoma Central Corporation, which the buyer cancelled last year after 3. Maj failed to meet its contractual obligations.
Local media quoted economy minister Darko Horvat as saying the deal is worth $36 million (32.6 million euro).
The government first announced its plans to support 3. Maj in early August, whereupon the commercial court in Rijeka decided to postpone to September 26 a hearing on the launch of bankruptcy proceedings against the struggling shipyard. The court has said that the government's intervention should result in unblocking the company's bank account, thus removing the main reason for the launch of bankruptcy proceedings.
3. Maj is part of troubled shipbuilding group Uljanik, which includes another major shipyard in Croatia, Uljanik Shipyard, along with smaller subsidiaries.
In May, a Croatian court launched bankruptcy proceedings against Uljanik Shipyard at the request of the country's financial agency citing the shipyard's overdue debt. Subsequently, the court also launched bankruptcy proceedings against the Uljanik Group.
(1 euro= 7.40312 kuna)