Asian-owned shipbuilder in Germany to file for bankruptcy

The struggling shipbuilder failed to secure funding for the completion of the "Global One" mega-liner. PHOTO: REUTERS

FRANKFURT (AFP) - German-based cruise ship builder MV Werften said it will file for bankruptcy on Monday (Jan 10), as the coronavirus pandemic scuttled the subsidiary of Asian tourism and casino giant Genting.

"The bankruptcy petition should be submitted today," a spokesman for MV Werften told AFP on Monday.

The struggling shipbuilder was taking the step after failing to secure funding for the completion of the "Global One" mega-liner, already 80 per cent of the way through construction, according to the company.

Designed to carry 5,000 passengers in 2,500 cabins, the huge ship had been due to leave the shipyard in 2021, but the pandemic has knocked the company's timetable off course and crimped its budget.

Around €600 million (S$921 million) is necessary to finance the completion of the vessel, for which the shipbuilder has been seeking support from the government.

The decision to declare bankruptcy came after lengthy discussions with officials in which the two sides "clearly have not found common ground", the spokesman said.

The Global One ship sits in Wismar, one of MV Werften's three shipyards along the Baltic coast of former eastern state Mecklenburg-Western Pomerania, where it employs around 2,000 people.

In June, the state took a stake worth €60 million in the business and extended a €47 million loan to the company.

In all, the government has offered financial support of around €300 million to MV Werften since the beginning of the pandemic.

The collapse was a "dark day for shipbuilding", said local IG Metall union leader Daniel Friedrich.

The completion of the Global One and the delayed payment of wages for December were priorities for the union, which criticised the "exhaustion of trust" between negotiators.

With travel still severely restricted, particularly in Asia, the company has seen demand for huge cruise ships and luxury mega-yachts dwindle.

The industry has also been shaken by a spate of recent coronavirus outbreaks on liners despite increased health measures, bringing new headaches to the pandemic-hit sector.

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