The Dutch group Damen sued Romania at an international court of arbitration, demanding the termination of the association agreement concluded in 2018, through which the Romanian state became the majority shareholder (51%) of the company Damen Shipyards Mangalia SA, which operates the shipyard of the same name on the shore of the Black Sea, and Damen remained with 49% of the capital and took control of the company’s operational management.
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The Dutch also asked for compensation, data analyzed by Profit.ro reveals.
“Damen Group has no information to communicate at this time“, the Dutch company said.
Damen previously requested compensation of half a billion euros, as reported exclusively by Profit.ro – SEE BELOW
The defendant is the Romanian state company Șantierul Naval 2 Mai SA, controlled by the Ministry of Economy, which owns 51% of Damen Shipyards Mangalia.
The employees of the Damen construction site in Mangalia sent an open letter to the Government last month, in which they sounded the alarm that, in the absence of concrete measures, there RISK ″imminent″ of temporary business interruption for most of them.
They said the yard was facing a sharp decline in workload, adding that negative financial results and “huge” debts to creditors, mainly the Damen group, magnified the risk of insolvency.
″In the event of materialization of the risk related to the loss of the litigation (arbitrary, filed by the Dutch – no), could result in significant cash outflows and would have affected the going concern principle. The society (Santierul Naval 2 Mai SA – no) did not ensure compliance with the principle of prudence provided by OMFP no. 1802/2014, by the fact that it did not perform an impact analysis and did not record a provision for the said litigation in the accounting records″, an official document states.
According to the cited source, the charter of the Damen Shipyards Mangalia joint venture provides that the foreign shareholder, Damen Holding BV, ″undertakes to exercise its managerial and operational control in such a way as to cause the company to achieve operating profit as soon as possible, but not later than the end of the financial year 2024″, and ″the Romanian shareholder will support, within the limits of his capacity as a shareholder (without managerial and operational duties) the efforts of the foreign shareholder in this regard″.
In the document it is also noted that, currently, the value of the majority holding of the 2 Mai Shipyard in Damen Shipyards Mangalia SA is entered in the accounting at the amount of 15.6 million lei, but given that the joint venture has registered negative equity that does not can be covered from future profits within a ″reasonable″ time frame, the Romanian state-owned company will have to reassess its holding and recognize an impairment adjustment during this year.
Damen issued a notice of termination of the 2018 agreement to the 2 Mai Shipyard SA, as early as last August, also demanding compensation of half a billion euros, as reported exclusively by Profit.roe. The association agreement provides for compensation if the agreement ends due to the fault of one of the parties.
The reason for termination cited last August by the Dutch was that, through a law passed by Parliament at the end of June 2023, the companies in the special situation of Damen Shipyards Mangalia, with a majority state shareholder, but with private operational control, they are no longer exempt from local legislation on the corporate governance of public enterprises.
The exception, introduced in 2018 precisely to make possible the arrangement with Damen from Mangalia, stipulated that the corporate governance legislation of state-owned companies does not apply to those companies where ″(…) the private shareholder no longer holds the majority stake and has the financial and technical capacity necessary for the development of the operator’s object of activity, in which case he can be entrusted with the executive management of the company, its managerial and/or operational control, under conditions of economic efficiency, with the assurance of know-how, customer portfolio and workforce″.
This provision was repealed by Law no. 187 of June 28, 2023.
″On the basis of this partnership with the Romanian state (perfected in 2018 – no), Damen provided financing, know-how, specialized resources, as well as customers 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-owned companies. At the moment, 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”, said the at Damen on August 4, 2023.
The conclusion was that the operational management must be taken over by the majority shareholder, the Romanian state company, and the Dutch will no longer take care of obtaining financing and contracts for the shipyard, where around 2,000 people work.
Subsequent, on August 11, the Dutch group stated that, in terms of relations with the authorities in Bucharest, ″only waiting for the cooperation of the Romanian side for an efficient implementation of the withdrawal procedure, with as few disruptions as possible for all interested parties″.
Previously, on June 28, 2023, the very day of the adoption of the normative act that amended the corporate governance legislation of state-owned enterprises and eliminated the exception dedicated to Damen Shipyards Mangalia, the company announced that it is launching a recruitment campaign to hire more than 200 new direct productive employees.
On August 13, 2023, the Minister of Economy, Radu Oprea, claimed that he had identified a transitional period in the law that allows the Dutch group Damen to exercise all its managerial prerogativesin accordance with the contract concluded with the Romanian state in 2018 regarding the Mangalia shipyard. The minister recalled that there was an exception to the corporate governance law, which allowed Damen to have the management of the shipyard, but through the PNRR this law had to be amended, so the exception has been removed.
Oprea also mentioned at the time that correspondence was being carried out with the European Commission and the OECD to explain why this exception was necessary and insisted that Damen still had managerial control of the site.
Damen Shipyards Mangalia has not yet reported its results for 2022. In the previous three full years of Dutch operational management, combined with majority Romanian state ownership (2019-2021), the company accumulated losses in the total amount of approximately 338 million lei.
Tags: TIME Dutch Damen sued Romania international arbitration court
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