Croatia’s financially troubled shipbuilder Uljanik has suffered another blow as it received a contract cancellation from a Canada-based shipowner.
Namely, Algoma Central Corporation decided to revoke the contract for the construction of a bulk ship with self-unloading system for the Great Lakes.
The company cited Uljanik’s inability to fulfill its contractual obligations with the contract no longer being binding for the contracting parties, according to a Zagreb stock exchange filing.
At the request of the buyer, all activities on the agreement for the newbuilding 529 have been previously suspended and physical construction has not yet been initiated, Uljanik said in the stock filing.
The development comes a month after Automarine Transport and Siem Shipping Inc, both part of Siem Group, cancelled contracts with Uljanik for the construction of four Pure Car Truck Carriers (PCTCs). The shipbuilding contracts were terminated as Uljanik was not able to deliver the vessels in line with the conditions noted in the contracts.
Automarine Transport and Siem Shipping rescinded the contracts for two 7,000 ceu PCTCs, respectively, on September 1.
The latest shipbuilding contract cancellation has added more weight to the struggling shipbuilder’s financial burdens. The company was forced to restructure amid a downturn in the global shipbuilding industry coupled with rising competition on the Asian continent.
As part of its efforts to raise the much-needed funds, in late September 2018 the Uljanik Group hinted it could sell its 3. Maj shipyard. At the time, the group informed that there were no legal procedures underway for the spin off of 3. Maj.
Uljanik also added that no formal steps would be made on the matter until the restructuring program for Uljanik Shipyard is adopted.
Shortly after the 3. Maj plans were revealed, Standard & Poor’s ratings agency said that Uljanik could cost the Croatian government up to 1% of its gross domestic product.
“Although we believe that contingent fiscal risks are contained, some state guarantees could be activated and fall on the government’s balance sheet,” S&P said.
“In particular, the resolution of the troubled Uljanik shipyard, which is currently in search of a strategic investor and could otherwise face bankruptcy, could cost the government up to 1% of GDP. The precise cost however depends on the final scenario, and the possible finalization of ships under construction.”