MARCH 1, 2016 — Genting Hong Kong, which last year acquired Lloydwerft Bremerhaven, is buying three more German shipyards — the Wismar, Warnemünde and Stralsund yards currently operated by Nordic Yards — for a total consideration of EUR 230,600,000 (about $250,706,000).
Nordic Yards has been staring at a dwindling orderbook and its 1,400 strong work force has been steeling itself for layoffs.
Genting Hong Kong intends to use the yards to build cruise ships.
Its cruise interests include Star Cruises, premium cruise line Dream Cruises, luxury cruise line Crystal Cruises and a large chunk of Norwegian Cruise Lines.
In a Hong Kong Exchange announcement, the company says:
The rapid growth of the world cruise industry, especially in China, has led to global cruise ship orders reaching an all-time high. As a consequence, the Group faces the potential risk of being unable to obtain sufficient cruise ship building slots at acceptable prices to implement its planned 10 year cruise ship fleet strategy for its three cruise brands, Crystal Cruises, Dream Cruises and Star Cruises. In order to address this risk, it is strategic that the Group acquire its own cruise shipbuilding yards to build its cruise fleet, freeing management to focus on design, planning and deployment of its planned cruise ship fleet.
The businesses of Lloyd Werft Bremerhaven AG and Lloyd Investitions- und Verwaltungs GmbH (together, the ‘Lloyd Werft Group’), acquired by the Group in late 2015 and early 2016, delivered to the Group the core competency to build quality cruise ships and this Transaction directly complements and strengthens that existing capability by providing covered docks and fabrication facilities that will enable quality cruise ships to be built efficiently regardless of the weather.
With excellent Government maritime coordination policies in Germany and a cluster of leading marine suppliers centered in Germany and Northern Europe, the company believes that, with the combination of the existing businesses of the Lloyd Werft Group, together with the assets and skills being acquired under this transaction, the group will be well placed to succeed as one of the best cruise and megayacht shipbuilding groups in the world.
The nitty gritty of the deal is complex to say the least, with various entities controlled by Genting Hong Kong buying various things from the various corporate entities holding the Nordic Yard assets that are being acquired.
Essentially, it seems to boil down to Genting acquiring the shipyards and not Nordic Yards as such.
So, what happens to the Nordic Yards labor force? Here’s what the stock exchange announcement says:
Immediately after the signing date of the Sale and Purchase Agreement, the relevant Operations Sellers shall each inform the relevant work councils and/or economic committees about the envisaged transfer of the Assets and the employees to the relevant Operations Purchasers. No later than 10 calendar days after the signing date, the relevant Operations Sellers shall commence negotiations with the aim of the conclusion of all collective agreements that are legally required.
The respective Operations Seller and the respective Operations Purchaser shall then offer to each employee a written tri-parte transfer agreement which terminates the employment relationship with the Operations Seller and establishes a new employment relationship with the Operations Purchaser on terms which are no less favourable than those in place prior to the Completion Date. The transfer of the employees to the relevant Operations Purchasers will occur in more than one stage. The first batch of employees will be transferred immediately following the Completion Date while the rest will be transferred in stages after certain existing customer contracts entered into by the Operations Sellers have been fulfilled, but in any case no later than 31 December 2017.
Read the stock exchange announcement HERE