German shipbuilder P+S on brink of insolvency

HAMBURG Wed Aug 22, 2012 9:12pm IST

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HAMBURG Aug 22 (Reuters) - Troubled German shipbuilder P+S Werften, which operates two of the country's biggest shipyards, has asked some of its customers to pay for ships in advance to bridge a liquidity shortfall and avert insolvency.

New Chief Executive Ruediger Fuchs has approached Danish shipper DFDS, passenger ferry operator Scandlines and Greenland's Royal Arctic Line, a P+S spokesman said on Wednesday.

P+S had planned to file for insolvency on Wednesday, the spokesman said, the possibility of receiving funds from customers gave Fuchs a couple more days to come up with a rescue plan.

The global shipbuilding industry has been suffering from a slump in demand for sea freight and an oversupply of container ships ordered before the global economic crisis. European shipyards have also been hurt by competition from China and Korea.

In Germany, deliveries dropped by more than half to 2 billion euros ($2.5 billion) last year. The most prominent victim was Hamburg-based Sietas, the country's oldest shipyard, which filed for insolvency in November, crushed by its debt.

P+S Werften, which has about 2,000 employees, ran into financial trouble when it fell behind schedule in delivering new ships, sapping its liquidity, the company spokesman said.

It received a German state guarantee for a 152.4 million euro rescue loan, but Fuchs, who was appointed CEO this month, found that those funds were insufficient to finish building any more ships on order.

P+S does not have enough money to bridge the time it would take to obtain approval for further state aid, the spokesman said.

Scandlines' Managing Director Soeren Poulsgaard Jensen told Reuters that he was interested in a quick solution for P+S, but declined to say whether his company would provide any funds. DFDS, meanwhile, declared that it would play no role in rescuing P+S.

"They have big problems, and it is entirely out of our hands to rescue this yard," DFDS Chief Executive Niels Smedegaard told Reuters on Wednesday. He said DFDS has already made partial payments for two vessels but declined to say how much.

Royal Arctic Line was not immediately available for comment.

P+S was created in 2010 through the merger of German shipbuilding companies Volkswerft Stralsund GmbH and Peene Werft GmbH. It makes vessels including container ships, fishing vessels, river cruise boats and passenger ferries.

It operates two shipyards, Volkswerft Stralsund and Peene-Werft Wolgast, in the northern German state of Mecklenburg-Vorpommern. ($1 = 0.8013 euros) (Additional reporting by Ole Mikkelsen and Maria Sheahan; Editing by David Goodman)

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