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The Maritime Executive
Finland’s Helsinki Shipyard reports it has granted an exclusive option to Canada’s Chantier Davie as the Canadian firm works to complete negotiations to purchase the assets of the Finnish shipyard from its current owners, Russian investors behind a Cyprus-based company. The sanctions on Russia after the invasion of Ukraine came as a setback to Helsinki Shipyard which was working to rebuild its business after having been acquired in 2019.
News of the negotiations was confirmed after the Finnish outlet Helsingin Sanomat first reported about the ongoing discussions. According to their report, the negotiations began ongoing since the start of 2023 after Helsinki Shipyard had been looking for investors for nearly a year. According to their report, the negotiations are in an advanced stage and could be concluded within a matter of weeks.
The shipyards in their official statement noted that exercising the option to purchase does not mean an acquisition is completed. “It is subject to the successful execution of thorough due diligence, including financial, regulatory, and legal considerations, as well as final decision making by Davie,” they noted. The newspaper reports, however, that Davie has already been in conversations with the Ministry of Labor and Economy, the Ministry of Foreign Affairs, the Ministry of Defense, Business Finland, Finnvera, and Teollisuussijoitus in Finland. Helsingin Sanomat says the goal is to ensure the acceptability of the deal before the final decision.
Last year, Finland’s Ministry of Foreign Affairs turned down an application from the shipyard that was required for Helsinki Shipyard to proceed with an order from Russia’s mining and metal company Nornickel. The Russian company had placed an order with the yard before the beginning of the war in Ukraine for a large icebreaker.
The order was critical to Helsinki Shipyard as the company is nearing the completion of the last of three expedition cruise ships being built for Swan Hellenic. Delivery of those ships had also been complicated by the financial sanctions as the vessels were being built for Russian lender GTLK which was to charter the ships to the cruise line. The shipyard ultimately was able to declare GTLK in default on the second and third cruise ships and hold a tender so Swan Hellenic could purchase the ships outright with new financing. The third cruise ship, SH Diana, completed her sea trials in mid-March and is pending delivery.
Expedition cruise ship SH Diana is the yard’s only major newbuild order and it is due for delivery in the coming weeks (Helsinki Shipyard)
Helsinki Shipyard’s financial condition was strained by the sanctions with the yard getting into a dispute with a supplier in the summer of 2022. The supplier attempted to force the shipyard into bankruptcy, but the yard settled the outstanding sums while seeking legal recourse regarding the contract.
The yard was once part of Wartsila before the shipbuilding group ran into financial troubles in 1990 and went through a series of owners. It was ultimately part of South Korea’s STX before that company also collapsed financially. In 2009, Helsinki Shipyard was sold to Russian investors and went through additional changes before being acquired in 2019 by Algador Holdings, a Cyprus-based investment company linked to Russian businessmen Vladimir Kasyanenko and Rishat Bagautdinov, who also own Russia’s biggest river cruise ship operator. They promised to revitalize the company winning the orders for the cruise ships and the icebreaker.
No sanctions have been imposed on the owners but the yard has not been able to obtain additional shipbuilding contracts. The business has also been expanded into repairs with for example a world-class sail racing vessel recently arriving for an overhaul. They also expanded their offering for superyachts.
“If the acquisition is successful, it would combine two historic and highly complementary businesses creating the western world’s leading international center of excellence for Arctic shipbuilding,” said Davie President and CEO, James Davies in the company’s press release. The Canadian shipbuilder is reportedly interested in Helsinki Shipyard because of its experience with ice class and Arctic vessels.
Davie is one of Canada’s oldest shipbuilders and in 2012 was acquired by private equity investors. They report their business includes commercial vessels, with repairs to ferries and other passenger vessels, but the majority of the work is for the Canadian government. Davie has an orderbook valued at over $6 billion with government contracts for icebreaker conversions and frigate maintenance. They are also participating in Canada’s newbuilding efforts for a polar icebreaker, government ferries, and Coast Guard icebreakers.
After confirming that they are in negotiations, the shipyards said the process would remain confidential. Davie said it will make a further comment only upon reaching a major milestone such as the signing of a purchase agreement.
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