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The insolvency procedure of the Damen Mangalia Naval Shipyard (DSMa) was caused, among other things, by the Covid 19 pandemic which led to the cancellation of some contracts that the company was going to execute, Florin Constantin, Senior Partner of CITR (the company that was appointed judicial administrator of the construction site), during a press conference that the representatives of the respective company held in Constanţa.
Quoted by Ziua de Constanţa, Florin Constantin stated: "From the analysis, it appears that both shareholders had the goal of keeping the company alive. I cannot say that at the moment the identified causes are mentioned in the report of the causes that led to insolvency; we are talking about Covid, which is quite distant in time, but had a major impact. The company was preparing to build cruise ships and the contracts fell because tourism fell."
The quoted source also shows that the CITR representative mentioned that the judicial administrator concluded two ship repair contracts with external companies, to ensure the continuity of the company's operations.
However, the employee representative from DSMa contradicts those from CITR. Florin Gobeajă, the president of the Free Navalist Union, told the BURSA newspaper: "We were waiting for CITR representatives to give us the big news, that they will sign a big contract by which, starting in 2025, the activity will recover at Damen Mangalia. Unfortunately, the information communicated by CITR is not news for employees. That means the activity won't resume anytime soon. We have been hearing about steps to obtain financing and letters of guarantee since last year, long before the company entered insolvency. As many times as we have been to the Ministry of Economy, Entrepreneurship and Tourism, we have been repeatedly told that such steps are being taken, but nothing has materialized. The contracts CITR is talking about refer to the repairs for two ships, and the works involve a maximum of 100 employees. Repair work takes two to three weeks on average. During this time, more than 1300 employees do not perform anything. (...) Regarding Covid-19, the construction site has recovered from the pandemic. We cannot endlessly cite Covid as one of the causes of insolvency, because we would also have to say that the war in Ukraine, the war in Israel, the Saharan dust, etc. are to blame. Let's be serious! Covid was not only in Mangalia, because the other shipyards made a profit during the pandemic. As long as Damen Galati made a profit during the pandemic - and more cases of Covid were recorded in Galati than in Mangalia - we cannot say that the pandemic is to blame for the insolvency of Damen Mangalia. This is a pretext, just as the rationale for changing the legislation related to corporate governance in state-owned enterprises is also a pretext. Damen says that it no longer owns the management at Mangalia, but the current management is appointed by that company, which still has 49% of the shares and has not gone anywhere. They say in the press that they left, but in fact they didn't. If they left, they would sell their shares."
• CITR claims that DSMa can become a profitable company
According to a press release sent yesterday to the Editor by the CITR company, its representatives show that, since taking over the mandate, the main concern has been to support DSMa in attracting new clients and working capital so that it can continue its current activity. Also, CITR identified the assets that are not related to the company's current activity and started their capitalization through public auction, with the aim of supporting the company in securing operational funds, including for the payment of salaries. Assets to be auctioned in the coming period include unused dormitories and houses, defunct buses and agricultural land, all off-site.
According to the quoted source, Paul Dieter Cîrlănaru, CEO of CITR, said: "In this regard, the company has already contracted repair works for two ships and, at the same time, we are in discussions with potential clients for the contracting of larger projects to ensure the cash requirement for at least the next few years. At the same time, the company is focusing on streamlining operational activity."
With the support of CITR, DSMa managed to contracts for the repair of two new vessels, an oil tanker and a chemical and oil carrier. Repair work for each of these will take about a month and will begin at the end of September.
The representatives of the judicial administrator claim that the main challenge specific to the company's activity is related to accessing the financial resources necessary to continue the activity and support contracts of the magnitude corresponding to the shipyard.
Florin Constantin, CITR Senior Partner said: "In the long term, the company is considering the possibility of contracting new projects for the construction of offshore structures under the conditions that in the summer of 2025 it is possible to launch new projects in this sense. At the same time, we also consider increasing the productivity and profitability of the current activity by implementing cost efficiency measures. Last but not least, attracting strategic partners who could bring capital and business expertise is one of the opportunities we are considering".
• Objective of national strategic interest?
The situation at Damen Mangalia seems at least bizarre, given that the Tudose government qualified the site as an objective of national strategic interest, according to the statements of Laurentiu Gobeajă, the president of the Free Navalist Union. DMSa currently does not even repair ships owned by the Romanian Naval Forces, not having any maintenance contract concluded with the Ministry of National Defense for the respective military vessels.
Laurentiu Gobeaja told us: "This company has never made a profit. In the six years since Damen came, the shipyard has been loss-making. Why it recorded losses emerges from an ANAF report in which it is stated that more than 55 million euros are unjustified amounts as losses, amounts that if the company had owned, it would not have reached here. I believe that both when the yard was owned by Daewoo, and during Damen's time, the losses came from the outsourcing of profit to the respective companies' home countries. In Mangalia, unlike Damen Galati, things are not going well because the state owns 51% of the shares, which means that it now owns 51% of the losses. At the construction site in Galati, Damen is a shareholder and has every interest in making a profit. (...) The state aspired to be the majority shareholder in Damen Mangalia and has 51% of the losses, because the company has never made a profit. The state does not want to give up 2% of the shares it owns, and when he heard that we also want to build a boat (ed. - marine corvettes), Prime Minister Tudose saw the construction site as a strategic objective of national interest. I don't know what that interest would be, because we don't even modernize the ships in the Romanian military fleet, we don't do anything. Well, if we are a strategic objective of national interest, the military ships had to come for repair: the frigate Ferdinand, the frigate Mărăşeşti, the frigate Regina Maria, the tug Grozavul. There are many ships that could be repaired, but that doesn't happen either."
We note that there are currently around 200 large shipyards operating in the shipbuilding industry in Europe. Damen Mangalia is the largest shipyard in Romania, with an area of over 1,000,000 square meters, which has quays over 1.5 kilometers long, 3 dry docks of over 300 meters each, a workshop of 28,000 square meters for panel assembly with semi-automated lines, a workshop for assembling curved sections of over 30,000 square meters, 18 cranes and 11 more workshops. According to the accounting records, DSMa's total assets are 1.26 billion lei, of which fixed assets 260 million lei and current assets worth 1 billion lei. The debts of the fire department amount to 1 billion lei.
DSMa has 1,453 employees, of which 761 are active and 692 are technically unemployed prior to the insolvency procedure that was opened on June 19, 2024.
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