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    Ambitious Lenac goes for growth

    Yard News // November 20, 2000
    Croatian repair yard Victor Lenac has received the funding it requires to expand, and is looking to the burgeoning offshore market for work.

    Speaking in early November, the Croatian yard's deputy managing director Ognjen Antunac said the yard would now be targeting offshore work, and more conversion work, but was also considering moving into the market for newbuildings.

    "The intensive and complex nature of high value conversion work on vessels such as cruise ships and offshore platforms should open the door to the construction of a variety of newbuilds", said Antunac.

    The yard would therefore be training its workforce to carry out both types of work, he explained, although it anticipates that repairs will be the mainstay of work carried out at there for the foreseeable future.

    Currently, the Lenac yard operates a pair of floating docks, although a third, recently acquired in the US, should also be in service early next year. At 140,000dwt capacity, it is somewhat larger than the company's existing assets, which are 24,000dwt and 70,000dwt docks, respectively.

    The funding that the Croatian yard requires to implement the expansion into offshore and other types of work arrived earlier this year in the form of capital from a number of investors. Antunac says the company's equity was increased by around $30 million, of which $12 million took the form of new shares in the yard.

    These included the International Finance Corporation (IFC) in the US, Raiffeisenbank Austria, and Deutsche Investitions und Entwicklungsgesellschaft (DEG) in Germany, all of whom are now shareholders in Viktor Lenac, which remains Croatia's only privately owned yard.

    The other shareholders are Belegginsmaatschappij Ella III, which is based in the Netherlands, which holds around a quarter of the company's shares, Antunac and fellow director Damir Vrhovnik. "It is important to state that the employees of the yard alsoinvested in shares in the company", said Antunac.

    The remaining $18 million was provided in the form of long-term, syndicated credit by IFC, DEG, HyppoVereinsbank, and Raiffseisen Zentralbank Osterreich AG.These funds will be used for the completion of the first phase of a multipurpose production plant for a variety of metal structures, said Antunac. They will also help to finance the acquisition of the Aframax dry-dock, which will enable Viktor Lenac to dock ships of up to 140,000dwt, along with large offshore structures.

    At the end of September, Viktor Lenac announced that it had signed a strategic co-operation agreement with Friede Goldman Offshore, the subsidiary of Friede Goldman Halter (FGH) Inc in the US, an agreement which defines the scope of joint activity in theoffshore markets in the Mediterranean, the Red Sea, Caspian, Black Sea, the Gulf and West Africa.

    FGH is a leading provider of new construction, repair, refit and conversion services to the offshore industry worldwide, and is active in both the drilling and floating production and storage sectors of the market; FGH's Engineered Products Group is a leading exponent in the design and manufacture of offshore and marine equipment such as mooring systems, skidding and elevating systems for jack-up platforms.

    Teaming up with FGH will, therefore, provide the Croatian concern with opportunities to target work on both drilling rigs, including large semi-submersible platforms, and the growing number of Floating Production, Storage & Offloading (FPSO) platforms required around the world.

    Explaining the rationale behind the agreement, Antunac highlights the Croatian yard's reputation for quality work carried out at a reasonable price, noting that the yard's new floating dock can be converted to accommodate offshore platforms as well as larger commercial vessels. "We are able to effectively organise the production of offshore platforms, but do not have the know-how or the negotiating strength of FGH", said Antunac.

    Speaking at the time that the announcement was made, J L Holloway, FGH's President and CEO said he believed that FGH and Viktor Lenac would be what he called "an unbeatable combination".

    "The agreement strengthens our position in the conversion and offshore markets", said Damir Vrhovnik, General Manager at Viktor Lenac, "and has the potential to significantly increase our revenues. Collaboration with one of the leading companies in platform design and production will enable Croatian companies to gain access to many valuable offshore projects".

    "FGH will be responsible for marketing, design and engineering services, and the production of key items of equipment, and is responsible for overall project management".

    In fact, Viktor Lenac is already actively engaged in offshore work having recently completed the Ivana B process module for the Ivana B gas platform.

    The process module was fabricated as part of a joint project with Rosetti Marion SpA in Ravenna, Italy, for the design, material supply, and fabrication of the Ivana B platform.

    The Croatian yard also holds contracts for two more platforms like Ivana B, the Ivana D and the Ivana E, which were contracted by a joint Croatian-Italian company, INAGIP, and is also working on a number of other offshore projects.

    The Ivana B, which was delivered at the end of September, is the first such structure to have been fabricated in its entirety by a Croatian yard.

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