The Croatian government is trying to find a solution to cash shortages at shipbuilder Brodosplit following sanctions imposed on a Russian bank.

The shipyard, based in Split, was unable in March to draw on a €60m ($63m) loan from Russian lender VTB’s Frankfurt subsidiary due to the war in Ukraine.

The yard and its parent DIV Group have filed for pre-bankruptcy court proceedings to begin as a result.

The cash was due to finance two ships under construction at the shipbuilder.

Croatia’s finance minister Zdravko Maric denied at the weekend claims by Brodosplit chief executive Tomislav Debeljak that a solution had already been found.

The minister said only that talks are underway and that the situation is very complex.

“Unfortunately… no agreement has been reached,” Maric told domestic media.

Talks have been held with the Croatian Bank for Reconstruction and Development (HBOR).

Brodosplit asked the government to support a proposal that the loans be rescheduled with HBOR funds.

One loan would be repaid by the end of the year and the other over a longer period of time, which would allow the shipyard to operate normally, the Hina news agency reported.

Cash drained

DIV Group has filed for a pre-bankruptcy procedure at Zagreb Commercial Court due to an outstanding debt of HRK 41.7m ($5.9m).

DIV had stepped in to provide €60m of its own funds as a result of the sanctions, instead of €30m originally.

In January, Brodosplit announced two new orders worth more than €200m.

The company clinched deals for a luxury megayacht and a polar expedition cruise ship, but gave no further details.

The yard was already building three ships.

Ships to finish off

Croatian-linked owner Triumph Subsea has contracted a multipurpose offshore wind farm unit called FDV Chronos for delivery in 2023.

The company has options for three more units at Brodosplit.

Then there is the 196-berth cruise ship Janssonius, which is set to be delivered in June to Oceanwide Marine Services of the Netherlands.

The final contract is for an unnamed 1,254-berth cruise vessel due in 2024 for Storyline of Florida in the US.

Russia’s VTB can no longer exercise any control over its European subsidiary in the wake of new sanctions, German regulator BaFin said.