The legal operating framework of the association between Damen Holding BV and the Romanian state regarding the Mangalia Shipyard has been cancelled, informs the Damen group, a minority shareholder in the Mangalia Shipyard.
According to the quoted source, Damen Holding BV (Damen) is a strategic player in the shipbuilding industry in Romania, owning and investing in the largest shipyards in the country (Galaţi and Mangalia) and operating the largest naval design company in Romania.
In 2018, Damen decided to invest in Mangalia and agreed to transfer to the Romanian side 2% of the shares of the company that operates the Mangalia Shipyard (allowing the Romanian state to become the majority shareholder in this company, with 51%), in exchange for receiving and keeping operational control and managerial of the shipyard.
Thus, on the basis of this partnership with the Romanian state, Damen provided financing, know-how, specialized resources, as well as clients and contracts in order to transform the site in Mangalia into a competitive one on the European market. This was possible as a result of the approval of the Government Emergency Ordinance (GEO) 73/2018, which amended GEO 109/2011, for the corporate governance of state companies.
“Currently, through the adoption of Law no. 187/2023, the legal framework under which the association between the Romanian state and Damen operated with regard to the Mangalia Shipyard was cancelled.
The legal framework that is currently applied violates the conditions offered, agreed and guaranteed in favor of Damen by the Romanian state and its structures in 2018, completely invalidating the principles that were the basis of Damen’s decision to invest in the Mangalia construction site. In addition, this fact comes after more than 3 years of other blockages in the decision-making process, no other type of help, involvement or financing from the Romanian partner”, the press release states.
Damen accuses the Romanian state of lack of support.
“We informed the Romanian authorities and the relevant entities about the impact of the new law on this partnership, even before its adoption, and requested immediate actions to prevent it. Damen insisted on genuine dialogue and a quick solution, to be implemented before the law comes into force, to minimize any disruption to shipyard activity and resolve the current difficult situation. This did not happen,” the press release states.
According to the cited source, following an already difficult collaboration and now facing these unilateral changes, Damen is thus faced not only with a breach of contract, but also with a breach of the relationship of trust on the part of the Romanian state. In this regard, after a previous notice of breach of contract through which Damen expressed for the last time its willingness to find a possibility for the continuation of the association, to which no solution was offered by the Romanian side, Damen had no other option rather than issuing the notice of termination of the Association Agreement concluded in 2018 with the Romanian partner.
“By taking this step, provided in the contractual framework of the association, Damen, as a foreign investor, protects its rights, investments, customers and projects at the Mangalia construction site,” the document states.
The site management also held a press conference during which they presented the next steps to this decision. “We will convene the General Meeting of Shareholders through which we invite both shareholders to discuss the strategy for the next period; what will be the medium and long term vision, what will be the support of the shareholders for the continuation of the relaunch and positioning of Mangalia where it deserves to be. It’s an unprecedented situation we’re in,” said Liana Constantin – Corporate Affairs Director and member of the Damen Mangalia Site Directorate on Friday.
“We hope that a solution will be found to ensure the continuity of activity in the Mangalia construction site, where we are talking about over 1500 employees and over 600 collaborating subcontractors. That is what we are waiting for in the next general meeting of shareholders to agree with the shareholders what are the next steps on the new legal framework, on the new, much more bureaucratic system that we will have to implement in the Mangalia construction site. And here, for this reason, representatives from the Ministry of Economy, together with Damen Holding VA, should sit down with us at the table to agree on the work system that we should have from now on on the new legal framework,” Liana Constantin further said.
She argued that the offshore wind market is a €200 billion market. In Europe there are only five shipyards capable of doing what Mangalia can do in the offshore industry.
“We have a structure ready for delivery that in September will power 600,000 homes in New York, United States of America. In addition to that, we have another similar project underway, a 2nd structure larger than the one destined for the USA, which will be delivered to Europe. There are no debts to the state budget, there have never been debts to the state budget. There were NO delays in the payment of salaries,” the Corporate Affairs Director assured.
Good! Let them first vote YES for us to get into Schengen and then we talk again.
Excellent move. Bravo and ofcourse the price can go up after that.