The Croatian government will not back a $1bn-plus restructuring plan for struggling shipbuilder Uljanik Group, prompting fears of its bankruptcy.
The state rejected what it called the financial burden of the rescue amid doubts the proposal would turn the yard company's fortunes around, Reuters reported.
In the absence of an alternative deal, a local commercial court will deliver a bankruptcy ruling within weeks.
Almost 3,000 people work at the group, which operates Uljanik Shipyard and 3 Maj.
It has been hit by cash flow problems leading to delays, cancelled orders and worker strikes due to wage arrears.
Prime minister Andrej Plenkovic told a cabinet session that the restructuring would cost between HRK 7.5bn ($1.14bn) and HRK 10.8bn.
“Such financial exposure would be a great burden for tax payers and the government cannot support it,” he said.
The government is still prepared to seek other solutions.
Domestic shipbuilder Brodosplit has agreed to be its strategic partner in return for a stake.
But any rescue costs outweigh the estimated bill for letting Uljanik go bust, which is estimated at EUR 557m ($626.35m).
A slimmed-down shipbuilding business could yet emerge from the bankruptcy process.
Uljanik has two ro-ro contracts remaining, plus two cruiseships and a livestock carrier.
Six suspects remanded in custody
This week, 12 people including former Uljanik executives were arrested in relation to a probe about HRK 1.2bn of "financial damage" there.
After being questioned by Rijeka county court investigating judge Dusko Tisma on Thursday, six were remanded in 30 days' custody, while three were released, the Hina news agency reported.
Those remanded were former boss Gianni Rossanda, Marinko Brgic, Dragutin Pavletic, Maksimilijan Percan, Silvano Kranjc and Veljko Grbac.
Anton Brajkovic, Domagoj Klaric and Zdravko Plisko were released.
Darko Sorc, Elvis Pahljina and Eduardo Milovan were also arrested, but the prosecutor's office did not request custody for them.
A majority of the suspects stood mute in court.
Brajkovic was Rossanda's predecessor as board chairman, Brgic and Grbac are former board members, Percan is 3 Maj's chairman and Pavletic is a director of unrelated shipowner Uljanik Plovidba.
Sorc is a director of Uljanik Shipmanagment, while Kranjc and Milovan are former Uljanik directors and Pahljina is a director of Uljanik Pomorstvo za Usluge.
Plisko and Klaric are former 3 Maj directors.
According to the criminal complaint, the alleged offences were committed from January 2010 to mid-October 2017.
