Sale of Global Dream to Stena Collapses Creating Doubts for MV Werften
The insolvency administrator for the German shipyard MV Werften reported a setback as the proposed sale of the incomplete Global Dream cruise ship collapsed at the end of last week. They are now reworking the plans for the Wismar shipyard location seeking alternatives for the cruise ship as well as providing employment for the yard’s former employees to reduce the potential financial liabilities for the German government.
“We had several serious buyers for the ship. In the end, the talks focused on an interested party who wanted to take over and operate the ship together with the other ships from the Genting shipping company," said insolvency administrator Christoph Morgen during a briefing on Monday in Wismar. He reported that while plans had advanced for Thyssenkrupp Marine Systems to take over the yard, the plan also focused on completing the incomplete cruise ship at the yard in 2023 to provide interim employment and reduce the potential cost to Germany due to loan guarantees provided to the yard.
Morgen reported that they were in advanced negotiations with Sweden’s Stena Group and that very advanced talks had been taking place with the federal government, state, and construction financiers. Stena had reportedly asked for an approximately $800 million loan which he believes would have been forthcoming. They intended to complete the construction of the cruise ship, which is estimated to be between 75 and 80 percent complete, at the Wismar shipyard.
“The specific trigger that broke the camel’s back and ultimately led to the rejection of the deal,” Morgen said was uncertainty over the Asian cruise market in large part due to China’s zero-tolerance COVID-19 policy. Stena also cited the rise in competition in the Asian cruise market now that Malaysian businessman Tan Sri KT Lim announced plans to restart cruise operations with the new Resort World Cruises.
Stena had planned to acquire and complete the Global Dream cruise ship, which Morgens believes is very tailored to the Asian market. Further Stena wanted to buy Dream Cruises, including the three cruise ships operated by the brand, from Genting Hong Kong’s liquidator. Lim, however, has chartered one of the ships for the new Resorts World cruise operation.
The insolvency administrators reported that they had two other companies that had also expressed interest in the Global Dream, but neither planned to complete the construction in Germany. Speculation has been that MSC Cruises was one of those interested in buying the cruise ship, while Lim also expressed interest. Lim however is believed to be offering a lower price seeking to take advantage of the bankruptcy to receive a discount on the cruise ship.
Earlier in May, the first meeting took place of the creditors of the shipyard, with Morgen reporting there were between 2,000 and 2,500 potential creditors for MV Werften. Many are former employees seeking overtime pay or promised bonuses. The others are suppliers to the shipyard and the goal was to pay them from the sale of the Global Dream.
The employees are currently in a transfer company, a German approach to unemployment, that is providing them 80 percent of their income till the end of June when the transfer company is due to expire. There was talk of extending the transfer company until the Stena purchase was completed, but now it is uncertain.
“TKMS wants to build ships here in Wismar. You need an empty hall for that,” says Morgen. The German shipbuilder is proposing to use the yard facilities in Wismar employing approximately 900 or more starting in 2024. The focus of the yard would be on submarines, frigates, and other specialized ships.
Germany’s economic and finance ministries told the news outlet NDR that the government might have to write off up to $280 million in loan guarantees provided to the shipyard, especially if the cruise ship has to be sold at a discounted price or for scrap. There are also concerns that the financial shortfall could create claims for damages from the suppliers who have unpaid invoices with MV Werften.