Germany Agrees To Rescue Cruise Ship Builder Meyer Werft

By Kamil Kowalcze

Sep 6, 2024 (Bloomberg) –Germany hammered out a deal that offers a potential lifeline for struggling shipbuilder Meyer Werft GmbH, the privately-held company that recently won a follow-on contract to supply vessels for Disney Cruise Line’s fleet.

The federal government will acquire a 40% stake in Meyer Werft along with “a stake of the same amount by the state of Lower Saxony,” according to Economy Ministry officials. The financing for the federal government amounts to around €200 million ($222 million). 

The government and Lower Saxony will “also guarantee 80% of a debt capital credit line totaling €2.6 billion,” they said. “The banks assume 20% at their own risk.”

Chancellor Olaf Scholz visited the manufacturer last month and voiced optimism that a solution can be found in talks with banks, adding that Germany’s lower house of parliament in Berlin and the European Commission would also be involved to get the deal approved.

The storied Papenburg-based shipyard, owned in the seventh generation by the Meyer family, employs about 3,300 people. It ran into trouble during the Covid-19 pandemic and banks started to question its creditworthiness. A large chunk of the purchase price for cruise ships is only paid when vessels are handed over to customers, making interim financing essential.

“It’s the firm determination of the government — of me personally and of my ministry, which is doing the work here — that Meyer Werft gets the support it requires to continue to build ships,” Economy Minister Robert Habeck said on Friday.

The rescue comes amid a prolonged downturn in the German manufacturing sector, which impacts Europe’s biggest economy as a whole. 

Apart from its main shipbuilding operations, Meyer Werft is also involved in a key project in Germany’s shift toward renewable energy. The company helps to build large converter platforms near the Baltic port of Rostock that are needed to feed electricity from offshore wind parks into the grid.

Meyer Werft on Aug. 12 announced a new contract to build four more ships for the Disney Cruise Line on top of the four already in its order book.

© 2024 Bloomberg L.P.

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