Finnvera, the Finnish government’s export credit agency, has reportedly refused to issue guarantees for loans of STX Finland, the troubled Finnish shipbuilder owned by South Korea’s STX Business Group, due to the Finnish company’s poor financial state, the Helsingin Sanomat daily reports on its website.
“The company has been declared a company in crisis, to which it is not possible to grant funding under the terms of EU’s state aid guidelines, according to the ministry of labour and economic affairs and the government’s specialist financing organization Finnvera, the paper said.
Helsingin Sanomat cited an unnamed person close to the situation, who said that STX Finland has seen “a dramatic weakening in liquidity in the course of last autumn.” The situation means that STX Finland is on the brink of bankruptcy and the two orders from TUI Cruises could be lost, the paper stated.
Finnvera has not commented on the matter on its website and Cruise Business Online has been unable to obtain a comment from the company as the news broke on Saturday morning. However, Finnvera does say on its website that it granted a 12 year loan of €180 million to Viking Line after the company took delivery of the 58,000 gross on cruise ferry Viking Grace from STX Finland earlier this week. The amount equals to about 70% of the value of the contract. Finnvera continued by saying that it also issued guarantees for STX Finland so that the shipbuilder could raise loans to cover financing needs during the construction of the vessel on the commercial market.
Meanwhile, work has started in Turku on the first of the two ships TUI Cruises has on order, the 97,000 gross ton Mein Schiff 3 is due for delivery next year, while the second vessel that has been quoted at 99,300 gross ton, should be delivered in 2015.
The Finnish shipbuilding industry has faced a major collapse once before in the last quarter of a century. In 1989, Wartsila Marine Industries that had been formed two years earlier by merging the shipbuilding units of Wartsila and Valmet, two Finnish engineering groups, collapsed due to a large orderbook that had been under-priced, which led to a serious liquidity crisis at the builder.
The situation was overcome by a debt-to-equity conversion, whereby the companies that had vessels on order at the yard converted their claims for shares in a new shipbuilder, called Masa-Yards, and agreed a higher price for their ships to keep the builder afloat. The arrangement was worked out by Martin Saarikangas, who became CEO of the new company and Ted Arison, then head of the Carnival group. In 1991, the Norwegian Kvaerner group acquired the company that became known as Kvaerner Masa-Yards.
