Pen was put to paper yesterday and the transfer of the government’s shares in the financially-challenged national shipping line, Sea Malta, were transferred to Atlantica di Navigazione SpA for a value of E1 million.
This sum was described as payment for the goodwill
of the virtually-bankrupt company. The agreement’s conclusion, however, is still subject to a due diligence exercise and, a potential deal breaker, the finalisation of the agreement between Atlantica and the General Workers’ Union.
Atlantica SpA also plans to invest a further E9 million to revamp Sea Malta’s fleet.
Describing yesterday’s transaction as a “very simple deal”, Atlantica and Grimaldi Group managing director Emanuele Grimaldi commented that the company had no need whatsoever for the two ships currently owned by Sea Malta, adding that the company was perhaps overpaying on the value of the aging ships.
He said, the company would have been just as happy had the government disposed of the ships prior to the sale. The MV Zebbug, in fact, will be scrapped “as soon as possible”.
Grimaldi will be purchasing an entire new fleet for Sea Malta, which will continue to operate under the same name.
The number of new vessels will be determined once the market is appropriately tested.
Some resistance could be expected from the GWU, which has objected to any changes in the terms of duty enjoyed by Sea Malta employees.
The main sticking point is the practice of working 15 days on and 15 days off.
Such terms of duty, Dr Grimaldi insists, are not practiced anywhere else in the world. He labelled the practice as “very peculiar, unique” and that the company would not agree to retain the practice. All working practices in the future of Sea Malta, he explained, will fall in line with those established by the International Transport Federation.
“These peculiar rules, which are unsubstantiated, have now expired and who wants to work will work in accordance with international practice,” Dr Grimaldi stressed, adding that the existence of such working practices is one of the reasons why Sea Malta is in such a poor financial state.
Asked why the company was interested in purchasing a company that was effectively bankrupt, Dr Grimaldi cited Sea Malta’s goodwill factor, the wide portfolio of its established client base and the company’s interest in developing its Mediterranean business.
A due diligence exercise is to begin next week, which will overview and possibly alter the figures related to Sea Malta’s losses of Lm4.75 million and its net asset deficiency of Lm1.5 million.
Dr Gatt said the government will be restoring the net asset position of the company by absorbing some Lm1.5 million (subject to revision) in debts owed by Sea Malta to other government owed entities such as the Malta Maritime Authority, Malta Drydocks etc..
In turn, the Grimaldi Group will pay the government 1 million Euros for the goodwill of the company (when the company is in a net asset deficiency situation) and it is terminating the lease of the company’s premises at Marsa, which property is valued by Government’s Estate Management Department at Lm 2.5 million.
“This leaves government with a net income of circa Lm 1.5 million,” Dr Gatt said.
Government is also being relieved of some EUR6 million in bank guarantees, which will be taken on by Atlantica.
At yesterday’s signing, Industry, Investments and IT Minister Austin Gatt made it clear that not a single job would be lost at Sea Malta as a result of the agreement and that their present salaries will be retained.
“What is important are not the details of the deal itself, but that we have managed to give a future to Sea Malta, which, up to now, had faced only two real alternatives – either bankruptcy or the injection of subsidies that would have probably gone against EU fair competition rules,” he added.