Germany Provides Bridge Loan as First Rescue Effort for MV Werften
The German government has announced that it has agreed to provide a bridge loan to the financially troubled MV Werften shipyards in order to resume operations and maintain employment until the spring. Part of the financially troubled Genting Hong Kong, MV Werften had suspended operations in March, citing the health restrictions that were disrupting the flow of materials to the yard.
Under the terms of the agreement, MV Werften will receive a 193 million euro ($228 million) bridge loan from Germany’s Federal Economic Stabilization Fund (WSF). The bridge financing is intended to cover ongoing operating costs as well as wages and salaries of employees at the shipyard sites.
"This is the result of intensive negotiations in recent weeks between the representatives of Genting, the MV Werften gruppe, and the federal government, with the participation of the state of Mecklenburg- Vorpommerns," said the state’s Finance Minister Reinhard Meyer. Under the terms of the agreement, all of the funds must be used at the shipyard focusing on the completion of an expedition cruise ship, the Crystal Endeavor, which had been due for delivery to Crystal Cruises in April 2020.
With the federal government's approval of the bridge loan, the state authorities, with the approval of the cabinet and the finance committee of the state parliament, are also releasing the remaining funds in a project account for Global I, the first of two 200,000 gross ton cruise ships also being built at the yard for Genting’s Dream Cruises. According to the statement from the state government, this will amount to approximately 43 million euros ($50 million) to continue the construction of the giant cruise ship at the facility in Wismar, Germany to achieve by year’s end the next milestone in its construction.
All three of MV Werften’s shipyards in Germany are expected to resume work during October while negotiations proceed for a long-term rescue package. The German officials estimate that a total of more than 500 million euros ($590 million) will be required during the second stage of the rescue for MV Werften. They are requiring additional reports from independent auditors and noted the plan would be in connection with Genting Hong Kong's planned restructuring measures. According to the state ministers, the goal is to achieve longer-term financing from the WSF by the end of the year, if possible.
“Intensive work will be done on this in the coming weeks,” said Mecklenburg- Vorpommerns' Economy Minister Harry Glawe. “We have taken a significant step forward. The federal rescue fund has opened up for the MV shipyards. This is a first important milestone for the shipyard sites.”
MV Werften said that it appreciated the support of the State of Mecklenburg-Vorpommern and the federal authorities and assured that all the funds from the loans will be used in Germany for MV WERFTEN´s shipyards. In 2016, Genting Hong Kong acquired the yard from Neptune Werft developing the current facility which employs about 3,000 people at three primary locations. To date, MV Werften has completed the construction of four river cruise ships for Crystal Cruises. Work was underway on the Crystal Cruises’ expedition cruise ship and the two large cruise ships for Genting when work was suspended.