The Croatian Privatisation Fund (HFP) has published on its web site invitations for bids for the privatisation of the country's six state-owned shipyards, with the deadline for the submission of bids being April 19, at 2 pm.
The tenders will be published in the Croatian daily Vjesnik at the beginning of next week, and in the course of next week they will be published in The Financial Times, The Economist, Lloyd's List and TradeWinds.
This is the second round of privatisation of state-owned shipyards. The first privatisation round was organised in August 2009, and by the end of September, when the tender expired, only two bids were submitted.
The government did not accept them because they did not meet mandatory tender conditions.
In the second privatisation round the state is selling, under special conditions, at a price of one kuna, its majority stakes in four shipyards - an 83.32 percent stake in the Rijeka-based shipyard 3. Maj, a 95.24 percent stake in Brodotrogir, a 99.54 stake in Brodogradiliste Kraljevica, and a 99.78 percent stake in Brodogradjevna Industrija Split.
The state is also selling, at nominal prices, its stake in Brodosplit-Brodogradiliste Specijalnih Objekata, which makes up 100 percent of the company's stock capital and for which the starting price has been set at HRK 18.16 million, and its majority stake of 59.25 percent in the Pula-based Uljanik, for which the starting price has been set at HRK 397.49 million.
The tenders envisage several mandatory terms, including one which obliges potential buyers to draft and submit a programme of restructuring in the duration of a maximum five years.
The programme must include structural and financial measures which are required to establish the shipyards' long-term profitability, including business reorganisation and rationalisation, and investments needed to achieve operational profitability.
The restructuring must include appropriate compensation measures, through the reduction of production capacity and the bidder's own contribution, which must amount to at least 40 percent of the restructuring costs.
Potential buyers will also have to submit a plan for the payment to banks of the shipyards' financial obligations for which the government has provided guarantees, and to take over the obligation of increasing their stock capital in cash with their own funds.
Another mandatory term is the adjustment of the shipyards' production capacity to the capacity stemming from the obligation to reduce the overall production capacity of Croatian shipyards covered by the privatisation process, as part of compensation measures agreed with the European Commission.
A detailed calculation of the required capacity reduction for each shipyard will be made by the Economy Ministry after the best bids are selected.
The bidders will also have to make an offer as to the amount of the licence to use the maritime domain, take over the obligation to keep in force the existing collective agreements, make an estimate of the necessary number and structure of employees upon restructuring and a plan to provide for surplus labour, specify how shipyards will ensure the completion of jobs from the existing order book, and offer acceptable instruments ensuring that they will meet the obligations they have assumed.
Apart from the mandatory terms, the bidders will be able to offer the signing of agreements with the social partners, as well as the possibility of making available, within six months from the day of the initial recapitalisation (after the stock capital is increased), 25 percent of shares, to be offered for sale to workers under special conditions (with an initial discount of five percent and an additional discount of one percent per year of service).
That possibility is envisaged in tenders for five of the six shipyards. The exception is Uljanik, a successful shipyard which will be offered for privatisation under slightly different conditions and for which the government has already decided to make a separate decision on the sale of 25 percent of Uljanik shares to its workers under special conditions.
Potential buyers can submit their offers for the purchase of majority stakes in the six shipyards by April 19, and when buying the bidding documents, they can request approval from the HFP to carry out an in-depth analysis of the shipyards' operation.
The government determined the conditions of the tenders earlier this week, when it also approved agreements regulating property relations between the state and the six shipyards.
