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Greece's largest shipyard is threatened with bankruptcy

03 October 2013 / 17:10:57  GRReporter
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Greece's largest shipyard Skaramanga has thrown down the gauntlet to the Greek government and remains closed although the right of the company to operate on a rotating basis had expired at the end of September.

Privinvest, owned by Iskadar Safa, does not seem to want to yield and, according to sources, intends to allow the shipyard to fail, requesting through international arbitration compensation from the Greek government to the amount of 1.4 billion euro.

If the shipyard closed permanently, Greece would lose its largest shipbuilding company, which will seriously affect the entire economy, and perhaps its submarines (there is no alternative for building them in another shipyard) which are considered as key regarding the national defence. Moreover, the Greek side has so far paid 2.3 billion euro for the submarines and has not received anything in return, and 1,200 people will lose their jobs.

Both sides have financial differences in connection with the continuation of the construction of the six submarines, which have been left in the shipyard. Iskadar Safa requested more than 200 million euro to restart the construction works, assuring that he would be able to gradually resume other commercial activities beyond the Greek navy, based on the decision on the supply of military equipment issued in 2010.

In early summer, the Greek government was willing to pay 75 million euro but its proposal was not accepted. Over the past two months, it seemed that the development of the negotiations would be positive but, according to sources from the Ministry of Defence, more issues than initially agreed were posed literally at the last moment.

Since the shipyard seems ready to come to an end, the Greek government, which has seen major companies closing or moving their headquarters over the past two years, actually has two options. The first is to request the owners of the shipyard to pay a fine of over 550 million euro, since the condition for the company to avoid paying a fine was the fulfilment of all the terms set in the decision of 2010. In this case, the shipyard will go bankrupt, the state will claim its movable property and will endeavour to offer the company for privatization again.

However, the fact is that the completion of this procedure, if it succeeded, would take many years, which will actually destroy the shipbuilding industry of Greece.

The second option for the Greek government is to sell one or two submarines which will allow it to finance the construction of the rest and then subsequently to proceed to the establishment of a single body of the shipbuilding industry of Greece, bearing in mind the fact that all in the industry approve the idea of ​​creating such a single body.

Clear position

The intentions of the shipyard’s owners to the Greek government are declared in a letter to the company's employees. "There are no clear signs that the issue will be addressed immediately but we continue to hope, and we are ready to examine exhaustively all options for finding a fair solution which will ensure the shipyard’s future and viability", states president and CEO of Privinvest Boulos Hankach, and adds, "As you know, our gradual isolation from any action on the one hand, and the fatal collapse of the workload due to deliberate non-payment by the contracting authority on the other, have brought us to financial collapse."

The employees

The employees in the shipyard, in turn, have started protests in order for them to receive answers from the Greek state. According to recent information, they had been asked to show patience for about another 15-20 days. However, the Ministry of Defence which has undertaken the negotiations has continuously been suggesting this in recent months.

Tags: ShipyardSkaramangaFailurePrivinvest
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