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Polish Shipbuilding - Privatization

Following Poland?s entry to the EU in May 2004, restructuring and, ultimately, privatisation of the shipbuilding industry remains one of the key issues facing the Polish government with regard to heavy industry. Due to the interaction of economic and political factors, the restructuring of Polish shipyards was not concluded at the time of the country?s EU accession. Throughout the 1990s and 2000s, the Polish shipyard industry received a considerable amount of national state funding. Due to the protracted restructuring process, state support continued to be granted after Poland joined the EU. As an EU Member State, Poland must now comply with European regulations on public aid; accordingly, continued support to the shipyards after 2004 was made conditional on the Polish government?s preparation of a restructuring and privatisation programme and downsizing of output capacity.

At the beginning of 2005 the process of merging the Stocznia Szczecinska Nowa (SSN) and Stocznia Gdynia shipyards into the Polish Shipyard Corporation (KPS) began. The Industrial Development Agency (ARP) would control 100% of the shares in the corporation. "Next year, possibly in January, we are planning a significant share issue of the corporation," revealed ARP president, Arkadiusz Krezel. The issued shares will be aimed at the State Treasury in return for a stake in Stocznia Gdynia, and ARP in return for shares in SSN.

The government of Leszek Miller in the negotiation package associated with Poland?EU accession treaty, did not act to include establishment of a so-called transition period in order to adjust the Polish shipbuilding sector to the common market principles. As a result, already on June 1, 2005, the European Commission (letter of Commissioner N. Kroes to Minister A. Rotfeld) informed Poland that investigation procedure had been launched with respect to the state aid granted to Stocznia Szczecinska Nowa, Stocznia Gdynia and Stocznia Gdansk. However, state aid continued to be granted, in different forms, in the years to follow.

On December 19, 2006, the government of Jaroslaw Kaczynski committed itself to privatise Stocznia Gdynia and SSN by June 30, 2007. That commitment was confirmed in January and February 2007. As soon as March that year the Deputy Minister of Economy, Pawel Poncyliusz merely declared preparation of the ?core resolutions? as regards privatisation, in June he called off that deadline and committed himself to conduct privatisation by the end of 2007. Two days after losing the election, the government of Jaroslaw Kaczynski made new commitments concerning privatisation of the Shipyards, being aware that responsibility for that process will lie with the new government.

In the summer of 2008, trade unions in the shipbuilding sector staged protests in Warsaw and other cities on the Baltic coast in an effort to persuade the government and European Commission to resolve the issue of restructuring and privatisation of Polish shipyards. The main reason for the protests was the late June deadline for Poland to present a programme for privatising the country?s largest shipyards. The Commission extended the deadline to 12 September, on which date Polish government submitted the amended program.

In accordance with the decision of the European Commission, the Polish Government has been obligated to initiate the procedure of the shipyard?s assets sale-off. The decision of the European Commission was announced 06 November 2008 concerning completion of the investigation which was initiated on June 1, 2005, as regards Stocznia Szczecinska Nowa and Stocznia Gdynia shipyards and compatibility of the state aid granted to those shipyards with the EU rules. The Polish government chose the path leading to privatisation of shipbuilding assets through asset restructuring, without the need for their bankruptcy or liquidation. The sell-off process has been made possible by the special Act of Parliament which became effective on 6 January 2009. The intention of the Polish government is to take steps in order to make possible retaining of the domestic shipbuilding potential in Szczecin and Gdynia, which is in the economic interest of Poland and the European Union. The workers will be transferred from companies which have been unprofitable for years to new private entities which are not burdened by old debts and previous state aid.

Agreements concerning the sale of assets of Gdynia and Szczecin shipyards were signed 19 June 2009. The tenders and auctions for the assets of Stocznia Szczecinska Nowa Sp. z o.o. and Stocznia Gdynia S.A. conducted by the Compensation Manager were finally brought to the end. The most valuable assets of the shipyards were sold to investors who won the respective tenders and auctions. Only low-value, insignificant groups of assets were left unsold. The assets required by shipyards to maintain their operation were purchased by a single investor, acting through Stichting Particulier Fonds Greenrights on behalf of United International Trust N.V. The investor declared a will to maintain and continue the construction of marine vessels. Stichting Particulier Fonds Greenrights ? the investor who acquired key assets of the Gdynia and Szczecin shipyards in May 2009, received guarantees from Qatar Islamic Bank, in agreement with Qinvest LLC seated in Doha. QIB is one of the biggest banks in all Arab states, operating among others in Europe and Asia. Qinvest LLC is one of the largest investment banks in Qatar. A 25% stake in Qinvest LLC is owned by QIB.