NEWS | Wednesday, 25 February 2009

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Matthew Vella
Lawrence Gonzi’s plan to recoup a reported €49 million which his government paid in early retirement schemes appears to have foundered, as bids for the Malta Shipyards have fallen short of this figure.
Sources privy to the privatisation process described government’s expectations to be “misled” if it was seeking to recoup the golden handshake it paid for 1,567 of the entire shipyards’ workforce – 96% of all workers at the Malta Shipbuilding, Malta Ship Repair, Malta Superyachts, and the Manoel Island Yacht Yard.
The four entities attracted 14 offers from prospective bidders, out of 52 expressions of interest.
But none are deemed to have satisfied government expectations, because they are reportedly too low.
Now plans are in place to soften the blow from the fallout of the revelations.
Finance Minister Tonio Fenech had no comment to make on the development last Sunday. He later told The Times it was too early to reach any conclusions, without denying that the offers had fallen short of what was expected.
He also said the criteria for the winning bid was not the financial bottom line, but primarily the “investment projections” and “the wider benefit for the economy and employment.”
“Bidders have clearly done their homework,” an industry source said. “They have considered the value of the emphyteusis for the land, and the value of machinery and equipment on each of the four sites.”
But expectations of offers running into “the tens of millions” for each of the four entities would be “misleading”, they said.
The companies are being sold solely for maritime activity purposes.
The €49 million in early retirement schemes put government and the General Workers Union at loggerheads over the fate of the shipyards workers.
While government was steadfast in its belief that the shipyards had to be downsized from 1,600 to 700 to be made more attractive to prospective buyers, the GWU exhorted workers not to accept the retirement schemes before they knew who the buyer of the shipyards was.
In the process, 1,567 workers took up the retirement packages – costing the Maltese economy 1% of its GDP, according to the European Commission.
Last week, the EC said Malta had breached its 3% deficit threshold due to higher wages in health, absorbing the sharp rise in oil, and early retirement schemes in preparation for the privatisation of the shipyards.
Many of the shipyard workers took up the retirement schemes after Neelie Kroes, the European Commissioner for Competition, insisted government could not absorb the shipyards’ debt under state aid rules, and should declare bankruptcy.
The government said it wants to absorb some €100 million in losses. Since the 1980s, the shipyards remained in the red despite €1 billion in subsidies, which terminated in 2008 at the end of a seven-year restructuring deal agreed with the EU.
The offers for the shipyards, which were in response to a call for expression of interest, were split over the four areas of the shipyards: namely three offers for Malta Shipbuilding, three for Malta Ship Repair, five for Malta Superyachts, and three for the Manoel Island Yacht Yard.
The government had received a total of 52 expressions of interests from prospective bidders but only 23 of these actually collected the bidding documents to make their offers.

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