The German government has proposed a rescue plan to save the century-old shipyard Meyer Werft, which is in deep financial trouble and is famous for building luxury cruise ships.
The German Economy Ministry officials recently announced that the German federal government and the Lower Saxony state government, where the Meyer Werft is located, will jointly contribute about € 400 million to acquire about 80.8% of the shares of the Meyer Werft, the federal government and the state government respectively contributed about €200 million ($222 million). In addition, the Meyer Werft will also get a new loan worth € 2.6 billion, the German federal government and the state government of Lower Saxony has agreed to assume 80% of the loan amount, the remaining 20% must be assumed by the bank.
The investments in question are subject to the approval of the lower house of the Germany’s lower house of parliament in Berlin and the European Commission before the next steps can be taken.
August 22, German Chancellor Olaf Scholz (Olaf Scholz) in the visit to the Meyer Werft during the work conference formally announced its major aid program, designed to fall into a financial crisis and on the verge of bankruptcy Meyer Werft to provide emergency assistance. At the time, there were numerous reports of Meyer Werft’s difficulties, and it was claimed that the shipyard needed €2.3 billion capital and €400 million in equity in order to cover losses and restructuring costs, and that it needed to obtain funds to pay its employees’ salaries by September 15 in order to avoid bankruptcy.
The storied Papenburg-based shipyard, owned in the seventh generation by the Meyer family, employs about 3,300 people. It ran into trouble during the Covid-19 pandemic and banks started to question its creditworthiness. A large chunk of the purchase price for cruise ships is only paid when vessels are handed over to customers, making interim financing essential.
With the disclosure of the latest details of the German government’s aid, Meyer Werft will officially become a German “state-owned enterprise”. However, German media reported that the validity of the guarantee provided by the government is 2027, and the Meyer family has the right to buy back the shares before 2028. The Meyer family will have a seat on the new supervisory board.
