Romania Begins Insolvency Against Damen Mangalia Shipyard

 

The long-running battle between Damen and the Romanian government over the operations of the Mangalia shipyard on the Black Sea took a new step as a court in Constanta initiated an insolvency procedure. An administrator has been appointed to look for a recovery plan for the shipyard.

The Netherlands’ Damen took operational control of the shipyard in 2018 with high expectations for the operation which remained 51 percent owned by the government. The yard had been in operation since 1976 known for 20 years as the 2 Mai Mangalia Shipyard. South Korea’s Daewoo launched a joint venture to operate the yard in 1997 and expanded the operations with a focus on commercial ships. In the next decade, the yard delivered over 200 ships.

Damen highlighted that the yard had three large drydocks and it was the largest in its group. Damen has a long history with Romania operating the Galati shipyard since 1999. Plans for Mangalia called for expansion and further investment in areas such as the outfitting capabilities.

Mangalia however was hit hard by the downturn in the shipping industry with the company citing the decline in demand from the offshore sector. They also reported increased competition from shipyards in Asia. When the pandemic hit the industry, Damen launched a plan for the reorganization of the yard. Plans for downsizing the operation and refocusing the business were not well received in Romania where it was reported Damen would reduce headcount at Mangalia by over 200 and at Galati by nearly 650 people. The company however in early 2023 highlighted a recovery including two HVDC (High-Voltage Direct Current) offshore transmission projects at the yard, both of which were being constructed under contracts with Aker Solutions as the main EPCI contractor.

The Romanian government in June 2023 passed a new law that gave it control of Mangalia and limited Damen’s involvement to a minority investor. The company protested but unable to resolve issues with the government moved in August 2023 to terminate the joint venture. Reports were at the time the yard was employing 1,500 full-time individuals plus contractors employees and flex-time staff.

Damen in April 2024 sought to take the case to an international arbitration court in Vienna. Damen was reported to be seeking compensation to end the joint venture and its loss of control of the yard. Reports in the Romanian media said that Damen had guaranteed more than $170 million in loans for the shipyard.

The shipyard filed for a bankruptcy proceeding at the end of May and last week the court decided to proceed with the insolvency. The administration set the first meeting for the end of August while saying it would be studying the business to understand its weaknesses and working to define a recovery strategy.  They said the aim was to provide as much stability and clarity in a complex situation.

Damen’s operations at Galati are separate from Mangalia where it was in a joint venture.