Ukraine company on course to buy Gdansk yard

Facing bankruptcy, the historic Gdansk shipyard has a buyer in one of Ukraine???s largest business groups, the Industrial Union of Donbas. However, new complications are tying up the sale.

The Ukrainian group, co-owned by billionaires Serhiy Taruta and Vitaliy Hayduk, hopes to bail out the state enterprise, which has seen 90% cuts in jobs in the last 18 years and faces restructuring orders from EU Competition authorities in Brussels. EU competition authorities claim the shipyard illegally received over $1.8 million in state subsidies since Poland joined the EU in 2004, and subsequently asked management of the shipyard to shut down two of its three slipways to ensure fair competition with other European shipyards.

These developments have raised fears with Gdansk shipyard workers that Poland???s newly elected pro-business liberal Civic Platform government would delay the sale of the shipyard to the Ukrainian conglomerate to investigate whether it was carried out fairly along with other former government dealings it considers non-transparent.

Back in September 2007, EU Internal Market Commissioner Charlie McCreevy said that the restructuring of the shipyard was necessary to limit the distortion of competition through state intervention. Now, the Gdansk shipyard risks paying Brussels back the millions of dollars it received in state subsidies if it does not reach an agreement with the Brussels competition authority, which opened a probe into the matter in August 2007. A Competition Commission decision on the shipyard???s future is expected in the coming weeks.

???We are aware that there exists the possibility that Brussels will make a decision to return the subsidized funds, however, we take this into consideration in our plans for the shipyard and are ready to pay the money back if required,?? said Industrial Union of Donbas (ISD) Vice President Oleksandr Pilipenko. Although Civic Platform supports further economic reforms and privatization of state enterprises, the new government has yet to give a definite timeframe for the deal to go ahead.

The Ukrainian group currently holds a minority stake. ISD???s intended 83% share buyout worth $400 million could settle the matter on all sides, since it stated it would not cut jobs and plans to diversify and modernize the shipyard using shipbuilders to produce metal parts for bridges or windmills.

Founded in 1995, ISD controls steel mills in Ukraine, Poland and Hungary and holds an interest in a mill in the US.