The Zaliv Shipyard in Kerch controlled by Kostyantyn Zhevago was taken over by a Russian company

Photo: Ukrainian photo

Shareholders of the shipbuilding company Zaliv announced that the company was raided. Up until this point the company was controlled by businessman Kostyantyn Zhevago. According to the company’s press release, on August 25 unidentified individuals supported by Crimean self-defense enforcers informed the employees of the enterprise that some individual with the surname Zherdev of the Gorky Zelenopolskiy Plant of Tatarstan will be the new director of the plant.

It was also stated that the production capacities of Zaliv have been re-registered to a company with the same name registered in Moscow. Employees of the plant were offered to register in the company’s office in Moscow. At the moment, the plant has been blocked and its legal management does not have access to the territory, says Zhevago.

Russian interests

The press service of the Ministry of Information and Communication of Crimea also confirmed that Zhevago was alienated from the management of the Zaliv shipyard. On August 19, Minister of Industry of Crimea Andrei Skrynnyk said talks were being held with Russian investors on the acquisition of Zaliv from the structures controlled by Zhevago.

Minister of Industry and Trade of Russia Denis Manturov earlier stated that his ministry is reviewing the issue of placing orders to Zaliv from Rosneft and Sovkomflot. He assured that the enterprise has “a very dry dock of more than 300 meters in length and 70 meters in width. Russia does not have such a dock”.

Price of the issue

For Ukraine’s shipbuilding industry the loss of Zaliv is quite tangible, says President of the Association of Shipbuilders of Ukraine Ukrsudprom Viktor Lysytskiy. He says the Kerch-based Zaliv is one of the three leading wharfs of Ukraine on the level of the Black Sea Shipbuilding Plant and the Mykolaiv-based Okean. In Kerch there is the potential to building ships with large displacement of 300 meters and a width of up to 50 meters. “The advantage of Zaliv is indeed its dry dock on which construction of ships is done according to the horizontal scheme, which is less labor intensive. In addition to that, the plant has two 600 tonne cranes allowing for the construction of the body of ships from large blocks, which also reduces costs,” Lysytskiy specified.

Lysytskiy doubts that the Russian investors be able to truly give new life to the enterprise that ended up economically isolated after the annexation of Crimea. “The simple fact that the unified Russia’s tanker fleet in Novorossiysk consists of tankers constructed abroad and that for years none of the tankers in this fleet were built in Ukraine (particularly since Okean that is capable of building such ships is now controlled by Russian companies – Capital) casts doubt on the plans for loading Zaliv with orders from Russia,” President of Ukrsudprom firmly believes. Russian owners of shipyards place their orders mainly with Croatian, Japanese and South Korean wharfs.

In the opinion of Senior Analyst at ART Capital Oleksiy Andriychenko, the takeover of Zaliv will change the plans of its Ukrainian owner in the shipbuilding industry. Recently, the company owned by Kostyantyn Zhevago announced that it is the full-fledged owner of the Norwegian shipbuilding plant Nor Yards. It was planned that Zaliv would collaborate with Nor Yards. Specifically, it was presumed that the Ukrainian enterprise would design and produce the bodies of ships and the Norwegian side would equip them.

Value of the plant

In Andriychenko’s opinion, the appraisal of the value of Zaliv is complicated by the fact that it has not been operational for the last several years at its full capacity. In better times the plant’s sales amounted to more than UAH 400 mn per annum. “And this is far from its limit. Then the indicator EBITDA was nearly US $12 mn and the value of the plant could have been as high as US $60 mn. But today, taking into account the risks of Ukrainian assets, the fact that it is registered in Crimea and the conflict with self-proclaimed authorities, nobody is likely to propose such a sum,” the analyst presumes.

Besides that, Zaliv is heavily in debt to banks to the tune of US $50 mn as of the end of 2013. In this situation shareholders’ capital is worth practically nothing, says Andriychenko. For the reason, the sale of the plant is not likely in Zhevago’s interest as he would not get a lot for it. Possibly that is why the Russian contenders tried to take over the plant after failing to agree on its purchase, said an expert who requested anonymity.

The Okean plant in Mykolaiv ended up in a similar situation. Zhevago’s company is suing the Russian investor Yusufov represented by Valeriy Morozov for ownership rights, but so far lady justice is not on the side of the Ukrainian oligarch. On May 14, 2014, the Supreme Economic Court rescinded the process of liquidation of Okean, which benefited the Russian management of the plant. That same day the Oversight Committee appointed Morozov as the head of the company. Then on August 1 the Mykolaiv Oblast Economic Court approved the petition of the Oversight Committee and obligated the State Registrar to make the corresponding changes in the State Registry.