German Vice Chancellor and Economy Minister Robert Habeck said on Thursday that a deal to rescue struggling shipyard Meyer Werft from the current financial crisis is “within reach”.
Meyer Werft is a traditional and “very, very efficient” shipyard in Germany, Habeck said during his visit to the video game fair Gamescom in Cologne.
According to the management of Meyer Werft, the German government, the government of the German state of Lower Saxony and the banks have reached an agreement in principle with the shipyard on a rescue package.
Chancellor Olaf Scholz is expected to attend a meeting with workers at the shipyard later on Thursday. Lower Saxony’s state premier, Stephan Weil, is also expected to attend.
The shipyard on the German North Sea coast, which employs over 3,000 people, is struggling with major financial problems. The reason for this is rising costs that are not included in the shipbuilding contracts. It is also difficult to obtain bank loans.
“We have been working intensively on solutions in the Ministry of Economic Affairs in recent weeks,” Habeck said, adding that politicians are aiming to reach a deal to keep the shipyard running.
The company is internationally known for building cruise ships. But a series of shipbuilding deals made just before the coronavirus pandemic have turned into huge losses for Meyer Werft.
The agreement sees the German government and Lower Saxony temporarily take a major stake in Meyer Werft and inject €400 million ($446 million) of equity into the company.
The shipyard has full order books. Just a few days ago, the largest order in the company’s history for four cruise ships was signed with the American Disney Group.
Construction has also recently begun on platforms for converters, which are needed to transport the wind energy generated in the North Sea to land.
However, the shipyard is struggling to borrow enough money from banks to complete the work after the coronavirus pandemic pushed it into the red.
Government loan guarantees are also expected to be part of the deal, allowing Meyer Werft to finance the cost of building additional cruise ships. In the industry, buyers generally don’t pay the bulk of a ship’s cost until it’s completed and delivered.
The company is expected to need nearly €2.8 billion in financing through 2027.
According to Meyer Werft, important details of a possible rescue operation still need to be worked out, including plans to move the company’s headquarters from Luxembourg to the shipyard in Papenburg.
Key lawmakers in the German parliament and the Lower Saxony state parliament would both need to approve a deal, as would the European Commission, as a state bailout of the shipyard could affect competition with other shipbuilders elsewhere in the EU.
A deal must be closed by September 15, otherwise the company has warned it will run out of money.
