By passing Law 187/2023 on 28 June 2023, the Romanian parliament put an end to the joint venture agreement concluded by Damen Shipyards Group and the Romanian State in 2018, when Damen acquired the shares of the previous shareholder of the shipyard in Mangalia. Control over the shipyard has now passed to the Romanian government and Damen’s involvement is now limited to a minority shareholding.
In 2018, Damen Shipyards took over the 51 per cent share package of the South Korean company Daewoo Shipbuilding & Marine Engineering. This transaction was approved by the Romanian government on condition that Damen transferred two per cent of the shares to the Romanian government, which already owned 49 per cent of the yard in Mangalia.
At the same time, a joint venture agreement was signed that guaranteed Damen full control over the yard, despite its minority interest. This was possible after the Romanian government granted an exception to Damen Shipyards Mangalia S.A. on the legislation relating to the corporate governance of state-owned enterprises.
The newly adopted Law 187/2023 scraps, inter alia, this exception. This effectively puts an end to Damen’s control over the activities of Damen Shipyards Mangalia.
No response from Romanian authorities
It goes without saying that Damen already raised this matter with various Romanian state bodies, including the government. Unfortunately, there was no response to this initiative or to the formal notice of breach of contract that Damen submitted to the Romanian State on 5 July 2023. That left Damen no choice other than to terminate the joint venture agreement in line with the provisions of the contract.
Damen Shipyards Group says it assumes that the ongoing work will be executed in accordance with the existing contracts.
Damen’s Romanian yards
Damen Shipyards Mangalia is the largest shipyard in the Damen Shipyards Group and it employs some 1500 employees, excluding the flexible shell and employees of suppliers. In recent years, Damen has invested heavily in the yard in terms of financing, knowledge transfer and projects.
In addition to the yard in Mangalia, Damen Shipyards Group is the owner of a shipyard in Galati, Romania. Among other projects, the combat support ship Den Helder is currently being built at this yard for the Royal Netherlands Navy and four anti-submarine warfare frigates for the Belgian and Dutch navies will also be built here. The current situation with respect to Damen Shipyards Mangalia will have no effect whatsoever on the position or activities of Damen Shipyards Galati.
Picture: Damen Shipyards Gorinchem (© S.J. de Waard / CC-BY-SA-4.0 (via Wikimedia Commons)).