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German Shipbuilder FSG Proceeds with Restructuring to Resume Business

German shipbuilder FSG looks to restart operations
Photo courtesy of FSG

By The Maritime Executive 09-02-2020 04:29:23

Germany’s smaller shipbuilder Flensburger Schiffbau-Gesellschaft (FSG), which in recent years has specialized in ro-ros and ferries, took a key step forward with its restructuring. The purchase agreement for the assets of the shipyard along with 350 of its employees was completed by investment companies belonging to Tennor Holding. The shipyard had sought court protection in April 2020 with a self-administered insolvency process but later was placed under the protection of the commercial court in Germany to complete insolvency proceedings.

FSG had a long history of financial troubles. Siem Europe, which was the yard’s largest customer, had acquired the shipyard in 2014 that dates back to 1872. Nearing bankruptcy, the yard was reorganized twice in 2019 with Tennor Holding taking control of the yard and promising to stand behind it. 

After a reported loss of $120 million in 2019 driven by delays and cost overruns in its construction projects, FSG encountered additional troubles in 2020. The Australian shipping company TT-Line canceled two shipbuilding contracts early in 2020 and in March following the German government’s recommendation to prevent the spread of COVID-19 all operations and production were temporarily suspended at FSG. Finally, in June the construction contract for what had been promoted as a new generation ferry, the Honfleur, was canceled by Brittany Ferries and its partner company Somanor. The companies cited a lack of confidence in the shipyard.

Under an agreement reached with the unions and the trustees at the end of July, a plan was formulated to restructure the yard’s operations. Half of the yard’s workforce, 300 people are not being retained at the new operation but moved to a transfer company where they are receiving retraining support. They are receiving 80 percent of their previous net wages until January 2021, supporting them to seek new jobs.

The agreement proceeded through the Flensburg district court and at the same time a new business plan is being formed for FSG. Now that the transfer of assets has been completed a spokesperson for the yard reports that 40 people are working at the yard including intensive effort for two anticipated ro-ro orders for Tennor. The remaining employees continue to be furloughed under the German "short-term work" unemployment scheme.

A new management team is also being finalized while the yard is also seeking new contracts. Negotiations are reported to be underway and currently they are anticipating additional orders from Tennor. In addition, FSG sought an agreement to complete the Honfleur but reports that Siem acquired the ship and is currently planning to move the ship from Flensburg.

According to their statement announcing the completion of the transaction, the goal is by the winter of 2020 to have finalized the management team and have developed a strategic plan to win future business in commercial and military new building.