German government moves to acquire majority stake in Meyer Werft cruise ship builder

The German government is likely to acquire an 80% stake in the Meyer Werft shipyard to rescue the cruise ship builder from the financial crisis it has faced following the disruption caused by the COVID-19 pandemic.

According to reporting by Reuters, the German government and state of Lower Saxony will acquire the majority stake in order to provide a cash injection to the 227-year-old company, with the owning family retaining a 20% stake.

The government’s controlling shares would then be bought back in future when the shipyard, one of the largest cruise ship builders in the world, is no longer in financial distress.

Meyer Werft has seen a surge in post-COVID cruise ship orders, with booked orders worth 11 billion euros in the last few months alone. 

However, because many cruise lines cancelled or defered existing orders during the COVID-19 pandemic, and because cruise line’s only pay the bulk of cash for vessels on delivery, the company is facing a 2.8 billion euro financial black hole.

Under the current tentative plan, the federal and state government would inject about 200 million euros ($223 million) each in equity, and offering state guarantees for 80% of the roughly 2.3 billion euros in required bank loans for the company.

German Chancellor Olaf Scholz visited the shipbuilder in northwestern Germany last week to assure workers the shipyard would continue to operate, and has insisted that the company is an “industrial crown jewel for Germany”.

“We all want to secure the continued existence of the shipyard – and with it everything that depends on it,” Scholz said in a speech during a meeting of the works council, but any arrangement would require approval from the German parliament and the European Commission.

Meyer Werft is one of the world’s predominant cruise ship builders alongside Italian industrial giant Fincantieri. The company is building Carnival Cruise Line’s Excell-class ships such as Mardi Gras, Carnival Celebration and their sister ships, and recently secured an order for four Disney Cruise Line vessels.

Meyer Werft was also behind the build of Norwegian Cruise Line’s game-changing Breakaway and Breakaway-plus class vessels in the previous decade, as well as Royal Caribbean’s Quantum of the Seas, Anthem of the Seas and Odyssey of the Seas.