News | Sunday, 24 January 2010

PRINT THIS ARTICLE

Shipyards sale tagged at measly €5.7m offer

Palumbo demands superyachts and gets blessing to team up with bidder

David Darmanin
Government is expected to announce the closure of the sale of Malta Shipyards Ltd for €5.7 million to Neapolitan firm Palumbo S.p.A., with the added possibility of entrenching the superyachts section in the deal.
MaltaToday understands the Italian firm signaled it would only go for the ship-repair facility if it is also granted the right to purchase the superyachts section.
With five bidders in the running for the superyachts facility, two consortia chose not to purse their bid, leaving Palumbo and two other groups in the running. MaltaToday is informed that the government will be authorising Palumbo to join forces with one of these consortia. The Malta Shipyards privatisation is divided into four units: the ship-repair yard in Cospicua, the former Marsa shipbuilding yard, the superyachts facility in Cospicua, and the Manoel Island Yacht Yard.
Preferred bidders for the Marsa and Manoel Island facilities were selected in June 2009.
Last September, Palumbo was identified as the preferred bidder for the ship-repair facility, but the government announcement at the time fell short of disclosing any amounts offered. The fate of the superyachts section was never mentioned.
But government sources have informed MaltaToday that in the process of negotiation, the Italian firm made a condition that it would only go for the ship-repair facility if it is also granted the right to purchase the superyachts section.
It is not yet understood whether the €5.7 million offer covers acquisition of both facilities, or just the ship-repair section.
Confronted with the figure, a finance ministry spokesperson told MaltaToday that no information can be divulged until the process is finalised.
This newspaper is informed that prior to the negotiation that led to the €5.7 million offer, Palumbo’s initial offer was even less – reportedly up to €1 million lower.
Palumbo was also one of five bidders interested in the acquisition of the superyachts section.
Melita Group and Spanish firm Astilleros chose not to pursue the bid, as did CMA-CGM. Another consortium – comprising the Hili Group, Francis Busuttil, S&D Yachts, the Falcon Group and Paul Cardona – resubmitted a bid.
Another group of leading businessmen, which includes the consortium that won the tender for the Manoel Island facility – also including the Midi group of Tigné Point – also bid for the purchase of the superyachts section.
But after their bid was lost to Palumbo, the Privatisation Unit uncharacteristically authorised the Manoel Island consortium to partner up with the Italian firm for the purchase of this section.
Meanwhile, senior financial consultants looking into the finances of Palumbo S.p.A. have expressed doubts on whether the Italian firm is large enough to handle a project of this size. Palumbo’s website says the firm, founded in 1967, operates two yards – one in hometown Naples, and another in the Sicilian city of Messina.
But a report issued by the world’s leading credit information providers D&B does not augur well for Palumbo’s potential to make a success out of the Maltese yards: “Palumbo might be a reasonably large firm in its own right, however, with a net worth of €10 million, it is very ambitious for them to go for a project worth much more that their net worth. This would entail heavy gearing and risk,” a senior financial consultant noted.
The company employs a lean team of 60 registered workers – less than Cassar Ship Repair in Malta.

ddarmanin@mediatoday.com.mt

Any comments?
If you wish your comments to be published in our Letters pages please click button below.
Please write a contact number and a postal address where you may be contacted.

EDITORIAL


Muzzling the messenger

INTERVIEW


Leaving it in neutral