German lawmakers on Wednesday approved a major rescue package for the ailing Meyer Werft shipyard, clearing the way for a temporary state takeover of the shipbuilder.
The budget committee of the Bundestag, as Germany’s national parliament is called, approved a government investment of 200 million euros to stabilize Meyer Werft.
The shipyard, best known for building large cruise ships, has found itself in dire financial straits after its business was turned upside down during the coronavirus pandemic. The shipyard had signed contracts to build a number of ships but was then swamped by rising costs that were not factored into the deals.
The German state of Lower Saxony, home to the Meyer Werft shipyard, also plans to invest €200 million, although state legislators have not yet given their approval.
In addition, both the state government and the federal government plan to provide a loan guarantee of approximately €1 billion each so that Meyer Werft can obtain financing to fulfil the orders.
In the shipbuilding industry, buyers typically pay only 20% of the price up front. Shipyards must cover the remaining cost of building the ship with loans or other sources of financing.
Meyer Werft said it needs to raise nearly €2.8 billion by the end of 2027 to finance new ships. Agreements must be made by September 15, otherwise the shipyard will run out of money.
