What does the Elefsina Shipyards consolidation agreement provide for?

The revival of the shipbuilding industry, through the restart, consolidation and upgrading of the Elefsina Shipyards, significantly strengthens both the Economy and the geopolitical position of Greece, as the Elefsina Shipyards will be a pillar for the National Defense Industry.

According to an information note of the ONEX Shipyards & Technologies Group, the agreement gathers the almost unanimous support of the workers at Elefsina Shipyards (99.7% rate), as well as the most important stakeholders and bodies (Municipality of Elefsina, EBEP), which confirms the its mutually beneficial nature.

The restart of the Elefsina Shipyards, through the Agreement, will give a significant boost to employment and the economy of the wider region of Western Attica.

The Agreement provides a sustainable solution to the huge problem of the accumulated debts of the Elefsina Shipyards. A strong vote of confidence in the Agreement and the prospects of the Elefsina Shipyards is the decision for the American Development Bank (DFC) to financially support the project.

The Strategic Agreements secured by the ONEX Shipyards & Technologies Group, as well as the significant investments it will make in equipment, Research and Development will bring Elefsina Shipyards to the forefront of the Shipyard Repair Sector, worldwide.

With a glance

The Elefsina Shipyards Consolidation Agreement forms a sustainable restart model for the Elefsina Shipyards.

– Direct investment of 100 million dollars

– Ensuring 600 jobs

– Compensations of 13.4 million euros – repayment of 100% of the remaining debts to the employees

– Creation of 1,400 new jobs within 3 years

– Additional revenues of 1.1 billion euros for the Greek State (direct and indirect taxes, insurance contributions) over the next 25 years

– Strengthening the Greek Economy with more than 1.6 billion euros that will be directed to domestic suppliers and the Greek Industry

Key points of resolution agreement

Creation of two new companies (“COMMERCIAL” and “DEFENSE” or “NEW COMPANIES”) following the ratification of the reorganization agreement, which will take over the transferred assets and liabilities of NVEE.

In the COMMERCIAL company (ONEX ELEFSIS Shipyards Industries) to which a significant part of the NBEE Assets will be transferred, it is expected that funds up to the total amount of 170,000,000 euros will be invested after the transfer. In the Commercial company, ONEX Elefsis financing is based on DFC ($102 million) as well as ONEX Group equity (€20-80 million), while it can be increased according to needs, in a second phase.

In the DEFENSE company (ONEX ELEFSIS Naval Maritime), the activity to be developed will concern the construction of warships and other floating shipyards, both on behalf of the domestic defense industry and abroad. Financing will be provided by Fincantieri, Italian financial institutions and ONEX with whatever capital is required to ensure the smooth execution of the company’s programs.

Debts

Based on the balance sheet of NBEE dated 30.09.2021, its total debts of all kinds amount to 432,686,301.67 euros (419,288,880.32 euros general debts + 13,397,491.35 personnel compensations), of which 211,899. 550.24 euros will be transferred to the NEW COMPANIES. The amount of the Transferred Liabilities includes an amount of 142,337,077 euros to the Navy.

Total debts amounting to 220,786,751.43 euros remain with the COMPANY, as non-transferable Liabilities and are satisfied by the liquidation product of the Non-Transferable Assets.

The total value of NBEE’s Transferable Assets in the event of bankruptcy is only 28,278,157.94 euros, with minimal recovery for creditors (see liabilities to the State).

The remainder of the Non-Transferable Assets and Non-Transferable Liabilities of NBEE will remain with NBEE and the Non-Transferable Assets will be liquidated by the court appointed Special Trustee. The product resulting from the liquidation of the Non-Transferable Assets will further satisfy the Company’s creditors for their claims included in the Non-Transferable Liabilities, while in case of non-satisfaction, the said claims will be completely written off.

Navy

Transfer/Transfer to DEFENSE of all the obligations of the NBEE dated 30.09.2021 to the Navy or 142,337,077 euros. This amount will be repaid after the Completion Date of the Transfers over a period of 30 years with withholding of flows

The Navy undertakes that immediately after the ratification of the Restructuring Agreement and by the Completion Date of the Transaction it will return to ALFA BANK all the Letters of Guarantee held in its hands, exempting NBEE from any responsibility for them as they relate to projects which, on the one hand, are not transferred to the NEW COMPANIES and, on the other hand, the claims it maintains due to them are regulated in the reorganization agreement. It is noted that TPC No.6 has been delivered since 6/2020, while TPC No.7 has already completed 90% of the project.
Employees

Transfer/Transfer to AMYNTIKI of all the obligations of NBEE dated 30.09.2021 to the employees or 27,041,925.10 euros, as well as their severance payments of 13,397,491.35 euros, which undertakes to repay them through equity or intra-party facilities and bonds.

In particular, regarding the payment of severance compensation, it will be paid to each of the EMPLOYEES, in accordance with the provisions of the relevant legislation.

It is noted that in the framework of a bilateral agreement between employees & ONEX, it is provided as an insurance cover for the employees, and in the event of any delays in the conclusion of defense programs, the payment of 30% of the accrued earnings with the decision of the court and the remaining 70% with the completion of the transfers and the transfer of the Shipyard to ONEX.

It is particularly emphasized that for the second time ONEX (initially in Neorio) will pay accruals of previous ownership before the formal completion of the transfer process.

Greek State

EFKA in case of forced liquidation will receive 4,039,604 euros, while with the consolidation plan it will receive 5,760,938 euros. • The Greek State in case of forced liquidation will receive 1,367,883 euros, while with the consolidation plan it will receive 1,894,773 euros. • Employees (total and with compensation) from 40,439,346 euros in case of forced liquidation will receive 2,015,531 euros, while with the reorganization plan they will receive 40,439,346. • The PN from Euro 142,337,077 in case of forced liquidation will receive Euro 1,579,517, while with the consolidation plan it will receive Euro 142,337,077. • The Other Insurance Institutions in case of forced liquidation will receive 218,048 euros, while with the reorganization plan they will receive 327,024 euros

Cost of not approving the deal

The non-approval of the Elefsina Shipyards Consolidation Agreement, combined with their particularly negative financial position, and the multitude of problems they face are expected to pose a direct risk to their continued operation, with particularly negative effects on the national economy (due to the size of the industry), national security (due to their involvement with the Navy’s defense programs), but also the local community (as it has determined the economic model of the region, and is directly linked to the economic survival of the wider regions). At the same time, the loss of debts for the Greek government, insurance funds, employees, and the rest of the parties involved will be almost total if the company enters a forced liquidation regime.

Benefits for the Greek Economy

In addition to NBEE’s existing obligations to the Greek State and the insurance funds, for which the reorganization plan foresees to be repaid, according to ERNST YOUNG it is estimated that the restart of the activity will bring the Greek State additional revenue from direct and indirect taxes as and from employee insurance contributions, totaling more than 1.1 billion euros over the next 25 years.

The Elefsina Shipyards are expected to employ 600 workers during their first 6 months of operation under the new regime (i.e. after the validation of the consolidation agreement by the competent court), while by the end of the 3rd year of operation, the total number of workers is estimated to rise above of 2,000 (1,000 in the commercial and 1,000 in the defense company). In total, over the next 25 years, this employment is estimated to bring benefits of more than 800 million euros to the employees.

Beyond the direct jobs and the fiscal positive sign, the restart of the operation of the Elefsina Shipyards is estimated to further strengthen the Greek economy over the next 25 years, channeling to domestic suppliers and the wider Greek industry funds amounting to 1.6 – 1, 8 billion euros.

Through the transaction, the operation of an important industry is restarted, which, in addition to creating high corporate value, redefines the productive dynamics of Greece in important sectors such as defense and shipbuilding.

Regarding the programs of the Defense Company, such as e.g. that of corvettes there is a huge possibility of flexible and long-term financing programs through Italian financial state organizations that ensure solutions for the Greek government. These can be further analyzed during specialized discussions, and have already been included in Fincantieri’s proposal for the Corvette program.