September 5 (SeeNews) - Financial guarantees of almost 70 million euro ($81.1 million) issued to Croatian shipbuilder Uljanik [ZSE:ULJNT] are likely to be activated soon, following the cancellation of four shipbuilding contracts, finance minister Zdravko Maric said on Wednesday.
"Given that the contracts for construction of four vessels were terminated, in addition to 30 million euro in advance guarantees we need to take into account that loans were taken out for the construction of these ships and they are also partially covered by guarantees. So, we are talking about an amount that reaches almost 70 million euro," Maric told the media in Zagreb in a statement aired by broadcaster HRT.
Maric added that the guarantees are "unconditional and payable on first demand".
He also noted also that a solution should be sought in talks with the clients and creditors.
Earlier this week, Uljanik said that Automarine Transport Inc. and Siem Shipping Inc., both units of Siem group registered on the Cayman Islands, had terminated a total of four contracts with Uljanik due to its inability to deliver the ships in the agreed timeframe.
Since then, the bank accounts of Uljanik, the parent company of the Uljanik Group, and group peer 3. Maj have been blocked.
Uljanik employs some 1,800 people and has been faced with financial difficulties for several years due to the adverse effects of the global financial crisis on the shipbuilding sector in general which has led to a drop in orders for new vessels.
On Friday, 4,500 employees of the group ended a 10-day strike after they received their delayed July salaries.
Uljanik d.d. is the parent company of the Uljanik Group which comprises 12 subsidiaries.
In March, Uljanik chose local company Kermas Energija as its strategic partner under its call for recapitalisation. The two sides are still waiting for the European Commission to approve the recapitalisation plan.
($=0.863787 euro)