Malta: Government requests shipyard bidders to submit fresh financial offers

The government has asked bidders who submitted offers for the four business units comprising the Malta Shipyards to reconsider the financial portions of their bids, The Malta Independent on Sunday has learnt. Bidders who are considering revising their financial offers upwards have until 20 June to submit their new proposals.
It is understood that the government has directly indicated to the bidders that their financial offers had been well below expectations when considering the operations’ potential. Moreover, this newspaper is informed that the government has also revised certain conditions pertaining to the sale of the ’yards.
A few weeks ago, Prime Minister Lawrence Gonzi had publicly admitted that the financial offers received from the 14 bidders had fallen well short of expectations, and had cited the current financial and economic crisis as a probable reason for the low bids.
Dr Gonzi also confirmed that he was prepared to halt the entire process until the international economy recovered sufficiently enough so as to attract suitable financial offers for the shipyards.
The government’s new request for bidders to consider increasing their financial offers could potentially delay the adjudication process. At this stage the Privatisation Unit should be in the process of verifying that each offer received is based on serious and professional interest so as to ensure that bidders are reputable, bone fide business operators.
Drawing on the last major privatisation process, which had seen the government divesting its 60 per cent shareholding in the former national telecommunications company Maltacom, the next step in the privatisation of the ’yards would be to shortlist the preferred bidders for each of the four business units, and request them to submit their final binding offer, which, in this case, could be 20 June.
The 14 received offers for the ’yards had come from around the world and included bids from European and Asian companies. No offer was received for the entirety of the shipyards’ operations; all 14 offers were split between the shipyards’ four separate operational areas. Three offers each were reported to have been received for Marsa Ship Building, Malta Ship Repair and the Manoel Island Yacht yard, while five offers were received for the Malta Superyachts operation.
The units include one of the largest for dry-dock repair, conversion and off-shore facilities in the Mediterranean comprised of three sizeable dry docks; a building yard with heavy steel fabrication facilities including a dry dock; a superyacht repair facility with two dedicated docks, one of which has a high retractable cover, and a yacht repair yard with slipways, refit and storage facilities. Initially, expressions of interest had to be submitted by 15 September 2008 but this date was later extended to 12 February 2009.
Earlier this month, it came to light through the spring economic forecast of the European Commission, that Malta Shipyards Limited will eventually be liquidated once the privatisation process is completed since the business and assets are actually for sale rather than the company itself.
Through this measure, the government could grant early retirement schemes to the majority of employees previously employed by Malta Shipyards Limited. The headcount currently stands at around 50 workers, and the shipyards has also completed its final contract.
Matters had come to a head last summer when the General Workers Union refused to yield to the government’s plans to downsize the workforce so as to render the enterprise more attractive to potential bidders.
Workers, however, changed their mind when EU Commissioner, Neelie Kroes, had suggested that Malta Shipyards Limited would have to be declared bankrupt and liquidated, and that workers would not have been able to claim compensation.