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ZAGREB (Croatia), June 14 (SeeNews) - Croatian businessman Danko Koncar and Kuwait's Livestock Transport & Trading Company have signed a memorandum of understanding on reviving the company's contract with troubled shipyard Uljanik for the construction of a livestock carrier, local media reported on Thursday.
The signed document is a formal confirmation of the two parties' willingness to complete the deal, even though it does not mean that a final agreement will be reached, daily Glas Istre reported, quoting unnamed sources.
According to the memorandum, which was signed by the Kuwaiti firm and Koncar's Kermas Energija, the latter should deliver the livestock carrier after 12 to 14 months following the takeover of the unfinished ship from Uljanik.
Rough estimates indicate that at present the ship is 40% completed, therefore in case an agreement is reached, Kermas will need to engage a certain number of Uljanik employees, the report said.
Earlier media reports have alleged that if an agreement is reached, the Kuwaiti company would finance the construction of the ship, while Koncar would commit to building it in cooperation with Uljanik's bankruptcy management, i.e. it will use Uljanik's infrastructure and employ some of the workers dismissed from the ailing shipyard.
The Uljanik Group has been in financial trouble for some time due to the adverse effects of the global financial crisis on the shipbuilding sector in general which has led to a drop in the number of orders for new vessels.
In April, Uljanik said that Livestock Transport & Trading Company had cancelled the contract for the construction of the livestock carrier because of the shipyard's inability to deliver the vessel pursuant to the contract's provisions. Still, the buyer was willing to negotiate the terms of a new agreement and complete the vessel at Uljanik, the shipyard said back then.
Under the contract, Uljanik was to build a livestock carrier of about 28,000 square metres of net pen area. Uljanik signed the deal with the Kuwaiti company in September 2015 after the two sides spent a year and a half to work together on the project.
In May, a Croatian court decided to launch bankruptcy proceedings against Uljanik Group, several days after the court opened such proceedings against its key member Uljanik Shipyard.
The group includes another major shipyard in Croatia - 3 Maj, along with smaller subsidiaries.
A court hearing on whether to open bankruptcy proceedings against the 3 Maj shipyard is scheduled for Jula 4.