Montenegrin Shipping Company (Crnogorska plovidba) will be required to repay Bar Shipping Company (Barska plovidba) one million EUR by June 1 next year, as part of a plan developed by the Ministry of Maritime Affairs. This amount will be advanced to Crnogorska plovidba by Bar Shipping for the charter of the vessels Kotor and Dvadeset prvi maj.
Additionally, Crnogorska plovidba will be obligated to allocate 9% of its future revenues to Bar Shipping, as stated in the draft business-technical cooperation agreement proposed by the Ministry of Maritime Affairs.
The Ministry of Maritime Affairs revealed last month that an analysis showed Crnogorska plovidba is heavily indebted and insolvent, and unable to meet its obligations. In response, a rescue plan was introduced, which involves a business arrangement with the Bar-based shipping company.
The draft agreement, which includes five provisions, was published last Thursday on the website of the Maritime Captains’ Association of Montenegro from Kotor.
The document specifies that Crnogorska plovidba will entrust Bar Shipping with the management of the vessels Kotor and Dvadeset prvi maj. The management will involve taking all necessary actions to secure charters for the vessels, providing support and advice in operational matters related to spare parts, fuel, insurance, regular servicing, crew, and logistics, as well as ensuring quality management and optimizing operations.
In return, Bar Shipping will provide Crnogorska plovidba with up to one million EUR to support its liquidity this year. This money will be advanced in installments, based on Crnogorska plovidba’s outstanding obligations to creditors.
The draft agreement also stipulates that Bar Shipping, when selecting charterers, must consider achieving the best possible market rates, as well as ensuring the credibility of the charterers, and must manage the vessels in an efficient and sustainable manner, optimizing costs.
Crnogorska plovidba commits to repaying the one million EUR to Bar Shipping by June 1 next year. Additionally, Crnogorska will pay Bar Shipping a management fee of 9% of its revenue from the vessels’ charter, calculated and paid quarterly.
This means that the Kotor-based company will pay Bar Shipping as a secondary broker who intermediates the vessel leasing contracts (since Bar Shipping does not directly contract with charterers but does so via the Greek agency Clarkson). Crnogorska will also pay Bar Shipping for consulting services related to the maintenance, repairs, crew recruitment, and other operational aspects of its vessels.
The proposed agreement specifies that it is concluded for an indefinite period, taking effect upon signing, and may be terminated unilaterally with a notice period of at least 90 days.
“We have found a temporary solution – the signing of a business-technical cooperation agreement between Barska and Crnogorska plovidba. Under this agreement, the two vessels will be leased to Barska at market conditions, and the company will pay an advance of up to one million EUR to ensure liquidity. The companies will agree on installment plans and further operations, but Crnogorska plovidba will be saved,” said the Minister of Maritime Affairs, Filip Radulović, last month.
The draft agreement also proposes the creation of a joint commission to assess the condition of the vessels Kotor and Dvadeset prvi maj, with a report to be prepared.
This provision has already been violated, as the technical director of Bar Shipping and his team, with the support of the Ministry of Maritime Affairs, recently visited the vessels of Crnogorska plovidba to inspect them, even though there was no legal basis for doing so, nor should the captains of Kotor and Dvadeset prvi maj have allowed this, as there is no signed contractual relationship between the two companies, which are direct competitors in the global market.
The fact that the Ministry’s rescue strategy is already being implemented before the agreement is signed and before the shareholders’ assemblies have been consulted is evident from the fact that the vessel Dvadeset prvi maj has already entered a new time-charter agreement with charterer Oldendorff for a period of six to nine months at a daily rate of 8,750 USD.
This contract came through Bar Shipping’s management and their broker Clarkson. The majority of Crnogorska plovidba’s Board of Directors voted in favor of accepting this contract, stating that they did not want to oppose the Ministry’s strategy, although they had a more favorable offer for the time-charter of Dvadeset prvi maj, which would have provided a higher daily rate of 9,000 USD and other significantly better terms for the company, especially regarding the “redelivery” of the vessel.
