MV Werften file for bankruptcy

The troubled MV Werften put the traffic light government shortly after taking office before a major regulatory test. It’s about thousands of jobs, hundreds of millions of euros in taxpayers’ money and the fundamental question of how the new federal government intends to deal with the rescue of companies in the future. And by the way, it is also about the political interests of the top politicians of the traffic light government, namely Federal Chancellor Olaf Scholz (SPD), Economics and Climate Minister Robert Habeck (Greens) and Finance Minister Christian Lindner (FDP).

In the struggle to save the MV Werften, the question is whether the new federal government is as generous as the grand coalition in the past. Or whether it draws a straight line in terms of regulatory policy. That is what it looks like for the time being in view of the bankruptcy.

While Habeck offered his help without thinking twice, Lindner was more cautious – and his finance department was somewhat surprised by the help of the green cabinet colleague for a billionaire, of all people, who earns his money with environmentally harmful cruises on which gambling is operated.

Lindner, however, was also in a bind. On the one hand, the finance minister dreads being held responsible for the loss of 1,900 jobs right at the start of his term in office and being portrayed as a ruthless market radical. The FDP’s memories of the fatal management of the Opel crisis in 2009, when the then FDP economics minister Rainer Brüderle initially refused to rescue Opel, are still fresh in the FDP.

MV Werften have been in a crisis for a long time

On the other hand, Lindner has to prove that, as finance minister, he safeguards the interests of taxpayers and does not easily throw their money after companies that have actually long been insolvent. Lindner insisted on further collateral from the Genting Group – probably also in order not to be a bad example of the further rescue strategy of the traffic light in the corona crisis. The Genting Group did not want to provide this security.

Habeck blames the parent company for the bankruptcy. “As the federal government, we have pulled out all the stops to avoid the bankruptcy of MV Werften and thus save jobs,” said the Minister of Economic Affairs. “However, the owners have turned down our offer of help.” The result is bankruptcy.

The MV Werften have been ailing for a long time. The company had already received state rescue funds in autumn 2020. The crisis has recently worsened. Specifically, there is currently a liquidity gap of 148 million euros, which should be closed for the time being through further loans from the state and federal government.

The “Global Dream”, originally with 300 million euros from the Federal Economic Stabilization Fund (WSF), was supposed to be completed. Aid has already been promised but has not yet been paid out because some conditions have not been met. Before Christmas it became clear that MV Werften needed another 300 million euros.

In return, the Ministry of Economic Affairs asked the owner to make a contribution of 60 million euros – that is how large MV Werften’s liquidity gap was put by mid-February. The ship was to be used as security for the federal financial injection.

Finance Minister Lindner also insisted on further securities. He demanded that the Malaysian billionaire Lim Kok Thai, head of the Genting Group, which bought MV Werften in 2016, should be responsible for part of the rescue aid himself.

According to Handelsblatt information, Kok Thai should personally guarantee the remaining amount, should a sale of the ship not bring in the 600 million euros that the federal government should provide the MV Werften with rescue aid. Since the sales proceeds of the ship were originally estimated at around 1.5 billion euros, this should not be a problem – unless Kok Thai himself no longer believes that he can charge that much, according to government circles in Berlin.

The “Global Dream” business model was on the brink

In fact, there have been more and more doubts lately. The “Global Dream” was intended for the Asian region as a sailing casino. Gambling is prohibited in mainland China, but not in extraterritorial areas. However, the People’s Republic has recently been increasingly putting a stop to gambling on the high seas – which is why the entire business model is on the brink.

The fact that the Genting group itself was hit caused further uncertainty. On Friday morning, trading in Genting shares on the Hong Kong Stock Exchange was suspended until further notice.

This may mean that there is even more federal money in the fire. The federal government has already co-financed another MV Werften ship with a guarantee secured by Euler Hermes. Should Genting file for bankruptcy in addition to MV Werften, it would be about hundreds of millions of euros in taxpayers’ money, according to Berlin.

And finally, there is in fact no prospect of continuation for MV Werften, according to government circles. Although the “Global Dream” is 75 percent finished, the company’s order books are empty after that.

The red-red state government in Mecklenburg-Western Pomerania, on the other hand, sees a certain continuation perspective for the company. After the construction of the megaliner, they want to drive structural change on the coast, for example investing in converter stations for offshore wind energy, it is said in Schwerin. The MV Werften are a very central building block for this. If skilled workers were to migrate because of the bankruptcy, this would set the coastal region far back.

The situation has changed after the change of government

The fact that the new federal government is less considerate of the MV Werften than the old one also has very mundane reasons. The MV Werften were previously in the constituency of ex-Chancellor Angela Merkel (CDU). In the grand coalition, it was always clear in the Federal Ministry of Economics, led by Peter Altmaier (CDU), in advance obedience that the MV Werften had to be helped in an uncomplicated way, according to Berlin.

In the past, self-interests also played an important role in the SPD: an insolvency of the company would have looked very bad for Mecklenburg-Western Pomerania’s Prime Minister Manuela Schwesig (SPD) before the state elections at the end of September last year.

After the change of government, the situation is now different. Schwesig of course left no stone unturned and used her short line to her party friend Scholz to save the MV Werften: She picked up the phone again and again in the past few days. But even the Chancellery could no longer avert the bankruptcy.

The President of Genting Hong Kong, Colin Au, had recently said that four offers for further funding had been submitted to the federal government. However, these have all been rejected.

But Genting was apparently not ready to bridge the 60 million euros in liquidity gap at MV Werften. The last offer is said to have been around eleven million euros, according to the negotiating circles. That was too little of the federal and state levels.

Raising the amount would not be a problem for billionaire Kok Thai, but in his opinion he should have pumped enough money into the MV Werften – a view that the state government in Mecklenburg-Western Pomerania also has because of an ongoing legal dispute over a loan from the state to Genting $ 88 million is not shared.

On Monday night, shortly after three o’clock, an email from Gentings was received by the state not to improve the offer. It is uncertain whether the “Global Dream” can be built despite the bankruptcy and how the workforce will continue.

On the other hand, it should be clear that the shipbuilding industry on the Baltic coast no longer has a future. A working group from the federal and state levels is now to investigate how the structural change on the coast can succeed.

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