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Croatia's struggling 3. Maj shipyard gets first tranche of 20 mln euro state loan

Author Iskra Pavlova
Croatia's struggling 3. Maj shipyard gets first tranche of 20 mln euro state loan Photo: Goran Kovacic/PIXSELL

ZAGREB (Croatia), September 12 (SeeNews) - Croatia's troubled 3. Maj shipyard said it has received the first,  43-million-kuna tranche of a 150 million kuna ($22.3 million/20.3 million euro) life-saving loan from state-owned Croatian Bank for Reconstruction and Development (HBOR).

On September 11, 3. Maj started paying the overdue salaries to its employees from the first tranche of the HBOR loan, the company said in a Zagreb bourse filing on Wednesday.

The remainder of the loan will be extended gradually in line with the loan terms and 3. Maj will inform the public about the withdrawal of the next tranches, the company said.

The HBOR loan, supported by a government guarantee, aims to help the company restart production and complete vessels already under construction.

A condition for the loan approval was that all 3. Maj creditors, including the state, should agree to postpone until September 1, 2021 the repayment of debt owed to them by the shipyard.

In particular, under the new debt repayment model, the shipyard will repay 15% of its outstanding debt to creditors within 30 days after withdrawing the HBOR loan, while the model for the repayment of the remaining 85% will be additionally determined by August 31, 2021 at the latest.

Earlier this month, 3. Maj 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. According to local media reports, the deal is worth $36 million (32.7 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=7.39341 kuna)