Measures to Keep EAS Functioning Depend on Bank Releases to Start Constructions.
Atlantic South Shipyard (EAS) located in the city of Ipojuca in the state of Pernambuco is threatened to close its doors in June 2019. In a hopeful initiative to revive the job market and the shipyard, two memorandums of understanding were signed that could allow the company to survive for another two years.
According to the shipyard’s president, Mr. Harro Burman, one of the memorandums was agreed with a company owned by Maersk, Aliança, for the construction of two container ships, and the other company that made the agreement was not revealed by the executive “for contractual reasons”; however, he does indicate that the company is national and interested in ordering two cabotage vessels.
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For these deals to move forward, they depend on financial intelligence, which involves a subsidy from the Merchant Marine Fund (FMM) in the Brazilian Fund Management Agency linked to the Ministry of Planning. The source of funding for this input is under discussion; the FMM does not have legal approval to allocate funds to the Infrastructure Guarantee Fund (FGIE) that belongs to the agency, according to the Ministry of Transport, Ports and Civil Aviation.
For the construction of the 4 ships, the agency would act as a guarantor of short-term financing granted by Credit Suisse to EAS, thus giving the company extra breathing room for this endeavor. At the end of last year, the shipyard had a debt of R$1.9 billion, of which R$500 million was due in the short term, resulting in a cash balance of R$103.5 million.
According to Burman, the agency may guarantee between 50% and 80% of the loan with ABGF, which evaluates the possibility of providing guarantees for loans to build ships in the country. The excess would be the responsibility of the company’s shareholders, the Queiroz Galvão and Camargo Corrêa groups, both undergoing financial restructuring.
Justifying that the companies do not have demand contracts with Petrobras, BNDES has not financed ship orders. In this scenario, EAS has recently entered into talks with Banco do Nordeste (BNB) to try to unlock credit in the sector.
Currently, the company’s only order is for 3 Aframax series ships, which only secures its operations until mid-next year (2019). The Atlantic South Shipyard has accumulated a loss of R$1.3 billion just last year, with a loss of R$466 million, and the result was negatively affected by a provision of nearly R$400 million.
Amid all these issues, the moment is to wait for a positive result so that the agreement materializes and moves forward, generating more jobs.
Petrobras and the Federal Government Are Very Close to an Agreement on the Production Sharing.

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