German lawmakers approved a major bailout for the struggling Meyer Werft shipyard on Wednesday, clearing the way for a temporary state takeover of the shipbuilder.
The budget committee of the Bundestag, as Germany’s national parliament is known, signed off on a €200 million ($220 million) government investment to stabilize Meyer Werft.
The shipyard, best known for building large cruise ships, fell into serious financial trouble after business was upended during the coronavirus pandemic. The shipyard had signed contracts to build a number of ships, but then found itself swamped by rising costs that were not accounted for in the deals.
The German state of Lower Saxony, where the Meyer Werft shipyard is located, also plans to invest €200 million, although state lawmakers have not yet given their approval.
In addition, both the state and federal governments plan to offer loan guarantees of around €1 billion each to allow Meyer Werft to secure funding to complete orders.
In the shipbuilding industry, buyers generally only pay about 20% of the price up-front, leaving shipyards to cover the remaining cost of building the ships through loans or other financing.
Meyer Werft said it has to raise almost €2.8 billion euros by the end of 2027 to finance new ships, and that agreements must be reached by September 15 or else the shipyard will run out of money.
