Radulović is systematically shutting down "Crnogorska plovidba"?

Although it has publicly announced that it is implementing a program to rescue the shipping company Crnogorska plovidba from Kotor from bankruptcy, the Ministry of Maritime Affairs (MoM) has already implemented part of the scenario from the "Restructuring Plan for Shipping Companies of Montenegro" that was developed for the needs of that department in March this year, which is called "Programmed Shutdown of Crnogorska plovidba AD".

This scenario implies the gradual collapse of the 100 percent state-owned company, so that its most valuable resources - two merchant ships with a carrying capacity of 35.000 tons each - are transferred to Barska Plovidba, in which the state shares ownership with a significant number of private, minority shareholders.

This is shown by the “Economic and Financial Analysis of Barska plovidba AD Bar and Crnogorska plovidba AD Kotor”, which “Vijesti” has access to. The document officially titled “Plan for the Restructuring of Shipping Companies of Montenegro”, written on just over 90 pages, although the Institute of Certified Accountants of Montenegro (ISR) is officially cited as its author, was actually prepared by the company “Računovođa” doo from Podgorica, whose founder and owner is ISR.

The analysis was commissioned by the Ministry of Maritime Affairs, which selected ISR to conduct it, and paid for by two shipping companies. The Ministry of Maritime Affairs, headed by Filip Radulović (Europe Now Movement), announced the completion of the analysis in September last year, when Radulović said that "several professors from the Faculty of Economics are working on the model" and that it would be ready in "four to six weeks".

The job was ultimately done by a Podgorica-based firm owned by ISR - an organization whose website states that it is a "self-regulatory, independent, voluntary professional association" of accountants and auditors. Their document was completed in late March and submitted to the executive directors of Barska Plovidba (BP). Boris Mihailović and Crnogorska plovidba (CP) Vladimir Tadic, or the Ministry of Maritime Affairs.

The ministry has so far kept the document out of the public's reach, although many interested parties in the maritime sector have requested that Radulović publicly present the analysis and restructuring program, which it has decided to implement in two shipping companies.

Contract for 20 days

On page 85 of the document obtained by "Vijesti", under the title "Programmed shutdown of Crnogorska plovidba AD", it is stated that this implies "the conclusion of an agreement on business and technical cooperation between Crnogorska plovidba AD and Barska plovidba AD under the following conditions: BP takes on lease and management of two ships owned by CP and which are currently leased and employed until September 2025, with the amount of the lease determined under market conditions; in exchange for the taken-over ships, BP would advance CP the missing funds in the amount of about one million euros to repay the overdraft loan to the First Bank of Montenegro, the payment of salaries and other necessary operating costs related to the ships (costs of fuel, oil, spare parts, consumables related to the ships); after collecting the first lease payments from the issuance of the ships, BP would refund the advance paid...".

They note that "this contract could be concluded within 20 days", and that "this type of contractual arrangement, as doubly binding, does not require prior approval by the Competition Protection Agency".

In the meantime, these have become the key provisions of the agreement on business and technical cooperation, which, at the insistence of the Ministry of Maritime Affairs, were accepted on May 19 by the shareholders' meetings of CP, which is 100 percent state-owned, and BP, where the state has about 56 percent of the capital. According to it, CP is obliged to return to BP by June of next year one million euros, which it would pay "in advance, in tranches, in accordance with the due obligations of Crnogorska plovidba to creditors", as well as to act in all respects according to BP's instructions and advice regarding all aspects of the daily management of the Kotor-based company's fleet and its employment in the market, as well as to cede to CP nine percent of all revenues it generates.

This contract, which contains only five articles and is not common in the global maritime industry, was immediately strongly criticized by the Association of Sea Captains of Montenegro, and in the meantime the dismissed Board of Directors of CP has problematized it from the point of view of several applicable Montenegrin laws. The dismissed Board of Directors accused the Ministry of Maritime Affairs of deliberately destroying this company, with the aim of transferring its two ships, which have been fully repaid to Chinese creditors, to BP, thereby facilitating the company's market position and repayment of the loan for the two ships, which it is repaying by 2034.

Radulović announced in April that they had "found a temporary solution, namely the signing of a contract on business and technical cooperation between Barska and Crnogorska plovidba, under which two ships would be leased to Barska under market conditions, and that company would pay up to a million euros in advance, which would provide the necessary money."

"These companies would agree on tranches and operations in the coming months, but Crnogorska plovidba would be saved," Radulović said at the time, and on May 12 at a press conference he reiterated that this arrangement was "the salvation of Crnogorska plovidba."

"We have come to a good solution to sign a contract between Barska and Crnogorska plovidba and in this way we are saving Crnogorska plovidba from bankruptcy. No one will be left without a job and we are saving two ships."

"Kotor" still trapped

The ship “Kotor” of Crnogorska plovidba was stopped in the American port of Savannah on June 15 due to a total of nine procedural and technical deficiencies identified by the US Coast Guard inspection. This has resulted in huge unplanned costs, which represent an insoluble problem for CP, which even before that had a liquidity problem because the Ministry of Maritime Affairs avoided for several months, as the representative of the owner-state, giving it timely approval for the extension of the revolving credit with Prva Banka. BP has so far paid CP 300.000 euros out of the contracted million, because it does not have enough money to maintain liquidity itself.

Although BP and CP management say they are doing everything they can to free the ship, the "Kotor" is still trapped in Savannah because it needs to pay almost $700.000 in various costs that have accumulated there in the meantime to various suppliers, who could otherwise initiate a court sale of the ship.

The Ministry of Maritime Affairs claims that there is no way for the state to settle these debts of its own shipping company, which the Ministry of Maritime Affairs previously placed into insolvency, because according to them, this would be a violation of state aid regulations, which is significant in the context of Montenegro's EU integration process...

Severance pay or employee takeover

Continuing the scenario in the "Restructuring Plan for Shipping Companies of Montenegro" entitled "Programmed Closure of Crnogorska plovidba AD", it states that during the term of the contract on business and technical cooperation, "BP would try to negotiate with seven CP employees a possible takeover, or payment of severance pay."

They point out that by taking over two CP vessels, BP would "improve its capacity to negotiate long-term charters and generate twice as much revenue."

"Considering the above, Barska plovidba would be able to regularly settle loan installments to Exim Bank, and to develop the capacity to repay its own debt to the state," state the authors of the Plan, noting that BP, with four instead of the two ships it currently has, would operate much better financially, repay its debt to the state more quickly for the installments of the Chinese loan that the Government, as guarantor, has in the meantime paid to Exim Bank instead of BP, which would aim to prepare a study that would provide positive financial projections for the business for the next three years."

This would then, say the authors of the Plan, enable the Agency for the Protection of the Environment to "obtain consent for the purchase of shares of minority shareholders of BP until the acquisition of a two-thirds majority of the state capital in the Company", and all of this could be implemented by the end of 2026.

"After that, the state could (through judicial or extrajudicial means, and after the ships have been assessed) take over two ships from Crnogorska plovidba into its ownership, and then enter them as a non-cash contribution to the capital of Barska plovidba AD. We believe that this could be implemented in the first quarter of 2027," state the authors of the Plan, noting that all of this would "significantly improve the financial situation of Barska plovidba AD, create its long-term sustainability and create the ability to borrow and expand the fleet by purchasing new ships (collateral on existing ships, without additional grants or guarantees from the state)."

"On the other hand, Crnogorska plovidba AD would gradually close down, lose its employees and vegetate as a legal entity, and its debt to the state would remain significantly unpaid. Only after the state takes over its ships would the debt of approximately 37 million euros be reduced by the amount of the ships' valuation determined by an independent certified appraiser," they described the scenario, part of which has already been implemented.

Of the four Montenegrin ocean-going merchant ships, only the CP “Kotor” and “Dvadesetprvi maj” are currently “clean” of their credit liabilities because they have been repaid to the Chinese, and only these two ships can be potential collateral for new loans. This is not the case with the BP “Budva” and “Bar” ships, which have been “blocked” by the repayment of loans to the Chinese as a means of securing credit obligations until 2034.

A designed recipe for social and political discontent

For the implementation of the scenario "Programmed shutdown of Crnogorska plovidba", the authors of the Plan also devised a recipe for amortizing the already growing public dissatisfaction in Boka with the attitude of the Ministry of Maritime Affairs towards the state-owned shipping company.

"In order to prevent negative political influences (especially locally in Kotor), it could be considered to change the name of the company 'Barska plovidba' AD to 'Plovidba' AD, and to open a business unit of this company that would possibly operate from an office in Kotor," the Plan states.

An accelerated version of CP's closure has been developed, which implies that the state immediately and without delay takes ownership of the company's two ships in exchange for its debt for the installments paid from the state budget for the Chinese loan.

"After taking over the ships, the state would place them under the management of Barska plovidba AD according to the same principle of business-technical cooperation as previously described in Option 1," the Plan states.

They claim that this would allow the state to "directly generate income and partially settle debts" from BP, but also that such a quick introduction of bankruptcy in CP "would be unpopular, both from a social and political perspective", whereby the state could be sued by Prva Banka due to the previous proceedings of its debtor - CP, which the Ministry of Maritime Affairs forced to sign a controversial agreement on business and technical cooperation with BP.