Polish government to help in shipyards privatization

“Part of the old debts needs to be covered in order for another party to pay the rest and invest”, Polish Treasury Minister Aleksander Grad has said referring to the privatization of the beleaguered Polish shipyards. The European Commission has strongly objected to state aid offered to the companies by the Polish government in recent years and the exact amount of needed state assistance will be known as soon as the privatization contracts are signed.

According to analysts privatization through insolvency would be a less costly option. The Treasury Minister revealed how much, according to preliminary estimates, the state would need to spend to cover the shipyards? debts in case of their privatization.

“The debts of Gdynia shipyard alone amount to at least PLN 1.5 billion and other kinds of risk are estimated at several hundreds of millions. However, owing to renegotiating numerous contracts this amount was reduced to PLN 500 m. The government is providing for various methods of transferring the funds to investors i.e. cash or shares.

If the European Commission disapproves of the privatization programme then the shipyards are likely to be privatized through insolvency. Local sources report that advisors unofficially recommend this option as less expensive. Grad says the shipyards continue to operate and, if the EC?s decision is positive, investors will take upon themselves the burden of supporting the shipyards until the final agreements are signed. Mostostal Chojnice and the Industrial Development Agency are looking for ways to support the shipyard in Szczecin.

The European Commission agreed to extend until September 12 the deadline for Poland to submit a plan of saving its shipyards. The Commission warns it may force Polish shipyards to return the public aid they had received, plus interest, if the final restructuring programmes do not include the required provisions for long-term profitability, production capacity reduction, high investor? contribution and an end to state aid.