Zagreb, 12 February 2010 – The Croatian Government determined yesterday tender conditions for the second round of privatisation of Croatian shipyards and agreed on the wording of agreements regulating legal-property issues between the state and shipyards. Those agreements, as pointed out at the meeting, should reduce the cost of restructuring the shipyards.

Tenders for privatisation of six shipyards will be published no later than 15 February and with the deadline of 60 days.

“The tender conditions are practically the same as in the first round, some details are additionally explained”, said the Minister of Economy, Labour and Entrepreneurship Đuro Popijač who especially points out the necessity of solving the issue of ownership of real estates on maritime domain.

“A mechanism for reducing restructuring costs through compensation for the so far unsolved legal-property issues is agreed”, he said.

The state and shipyards settle their debts through agreements regulating legal-property issues; state fee for real estates on maritime domain – about 8 billion kuna, is compensated by debts shipyards have towards the state on the basis of paid protested guarantees and loans provided by state guarantees which will be taken over by the state in the privatisation process and other outstanding debts.

According to agreements, the estimated value of real estates in 3. maj shipyard in Rijeka is 3.2 billion kuna, Shipbuilding Industry Split 2.69 billion kuna, Uljanik shipyard 1.04 billion kuna, Brodotrogir shipyard 634.3 million kuna, Kraljevica shipyard 368.6 million kuna and Brodosplit – Special Vessels Shipyard 83.4 million kuna.

“We wanted to solve the issue of ownership of real estates in maritime domain legally in order for potential buyers to have insight into the situation with ownership”, said Popijač.

The European Commission experts and corresponding Croatian experts have accepted legal documents and it is agreed that the cost of restructuring the shipyards is reduced for the amount of fee.

“This significantly reduces own restructuring costs”, said Popijač and added that this was the key element which was not harmonized with the European Commission in the first round, and which enables the more favourable conditions in the second round of privatisation.

The obligatory tender conditions stipulate namely that potential buyers’ own share is at least 40 percent.

“We did everything possible to make this privatisation round more attractive and we can expect the real interest from serious investors”, he said.

The Vice-President of the Government and the Minister of Finance Ivan Šuker mentions how much the shipbuilding industry costs tax payers – this year 4.5 billion kuna of loan covered with state guarantees comes due, and in the following few years 12.5 to 13 billion kuna of such loans come due.

However, if the shipyards went bankrupt, this amount would be for about 2 billion kuna higher.

Minister Popijač reminded that in the first round some bidders had claimed that the situation in shipyards was significantly different as compared with the documents and announced that the potential buyers would have “data room” at their disposal with data from 31 December last year but the managements would give the newest monthly data at the end of February and March.