The Bundestag, the lower house of Germany's parliament, and the Lower Saxony state parliament have given official approval for the extension of financial support to local shipyard Meyer Werft.
The move had been considered earlier by the country's federal government in light of the financial difficulty experienced by the company. The proposed lifeline has also secured backing from Chancellor Olaf Scholz, who confirmed the government's promise of support during a recent visit to the yard's facilities in Papenburg.
Meyer Werft had incurred losses following the onset of the Covid-19 pandemic and a significant decrease in orders for new vessels. The company was then forced to temporarily reduce its production activities, resulting in only one large and one small cruise ship being completed each year.
The federal government and the government of Lower Saxony are set to invest €400 million (US$440 million) in exchange for an 80 per cent interest in the company.
A loan guarantee of €1 billion (US$1.1 billion) is also being proposed, and its terms include a provision that it will be covered by the federal government in case of a default on the part of the yard. However, this proposal remains subject to the approval of the Bundestag's budget committee as the loan amount is in excess of €700 million (US$770 million).