Linas Jegelevičius for the BNN
Dry-bulk operator shipper Lithuanian Shipping Company (LSC) has been so deep in trouble that Lithuanian Prime Minister Algirdas Butkevičius was forced to cut short his vacation and rush to Vilnius to salvage the bankrupting company’s seamen stranded in ports scattered across the globe –in the United States, Portugal, Africa and Italy.
The ships have been grounded by local authorities following court rulings on the cash-strapped shipper’s incapacity to meet its obligations to numerous creditors. Some of the seamen were reportedly suffering from water and food shortage.
After several sittings this week, the head of Lithuanian Government has announced LSC, teetering on the brink of bankruptcy, will get a 3 million euro loan as early as next Monday.
«We hope that already next week- as early as Monday and Tuesday, the first debt payments will be done and ships will be released. Our aim is to set them free and allow them leave the ports after they offload their cargo,» Butkevičius told Lithuanian media Wednesday, July 29.
Experts believe, however, that LSC may need an extra 2 million euro for an immediate relief.
Three million euro loan comes at the expense of the state-owned company operating Lithuanian railways, «Lietuvos geležinkeliai», which after the Government-held meetings agreed to have its annual dividends cut this year by the amount of the loan.
Such arrangement might be in breach of EU law, some experts warned, however.
Following ship detention, Lithuanian President Dalia Grybauskaitė, exasperated, has called on resignation of Rimantas Sinkevičius, the Transport Minister, who she said is «first of all» responsible for the plight of the Lithuanian maritime company.
The head-of-state also lashed out at his predecessors, including the incumbent PM, who held the ministerial office during 2006-2008, saying they were «amassing» problems in Lithuanian Shipping Company.
The dry-bulk shipper has been staving off 11 million euro debt, which is part of a huge loan the company received from SEB Bank back in 2002 for acquisition of new ships.
LSC has to pay bank the debt it by the end of the summer.
LSC expansion plans were thwarted by the global downturn in 2008-2010, which saw sea cargo shipment prices nose-diving.
The shipper had had 11 fishing vessels during better times, but now operates only five. The loan coupled with scathing interest rates and the bank’s reluctance to re-negotiate the loan terms pushes the insolvent maritime company into abyss. Around 230 employees are said to be on the payroll in LSC.
The embattled company has already sought help from the Government last April, asking it to allot 11 million euro, but the authorities refused to extend a helping hand.
With the debts for creditors and local ports piling, the shipper saw all five ships apprehended in May. «Romuva» was detained in Italy, «Voruta» –in Portugal, «Raguva»- in Senegal, «Venta»- in the United States and «Deltuva»- in Poland.
Following Minister Rimantas Sinkevičius’ meeting with the President in mid -July, the Ministry announced LSC will be put through bankruptcy proceedings.
However, PM Butkevičius stepped in abruptly, saying that an emergency 30 million loan from SEB Bank will be given to LSC. It has allowed LSC to terminate bankruptcy proceedings.
«If we would not have saved the company today, we would have incurred tremendous losses and the ships would have to be sold at a very low price,» Butkevičius was quoted as saying. «If we would not have saved the company today, we would have incurred tremendous losses and the ships would have to be sold at a very low price…I think confidence in Lithuania’s maritime shipping would have decreased substantially as well. Of course we have to take care of seamen who have not received wages for several months, and this is a state enterprise.»
The prime minister inclined the loan of 3 million euro, to be guaranteed by Lithuanian Railways, will enable LSC to continue its activities until a plan for the company’s future is prepared, suggesting that its privatization is a possibility.
The PM expressed confidence the company will bring profit once a plan to continue operations was put in place. He did not elaborate on that, however.
Meanwhile, Petras Bekėža, the chairman of the Lithuanian Seafarer Union, told BNN he fears the demise of the Lithuanian Shipping Company will erase Lithuania’s name from the map of maritime nations.
He also called on the stranded seafarers not to abandon the hold-up ships and not come back home as it could make it difficult to get the long-overdue pay in the future.
Believing the accounts some of the seafarers’ relatives, the situation the seamen have ended up being in is quite desperate.
Sonata Lapinskienė, daughter of «Raguva» shipmaster’s second-hand Juozas Bakanaukas, told «Vakarų Ekspresas», a newspaper, her father along the other men and a female cook, the only woman on board, had suffered from the disconnection of air-conditioning. Besides, the food had ben rationed.
«They switched of AC in order to save the fuel. Fortunately, it has been turned on already,» she told.
According to her, the crew’s passports were taken away, so with no money in the pockets, they could not leave the ship.
LSC reportedly owes over 1.5 million euro in wages for around 100 seamen. The total of LSC debts is put at roughly 20 million euro.