The Government of Finland has announced it will support STX Europe with a $37 million loan if the shipyard can secure a deal with Royal Caribbean to build a third Oasis-class cruise ship.

STX has been lobbying the Finnish government for the 28 million Euro deal without luck until the government stipulated that it would indeed grant the money from its European Union-approved aid provided that a deal between STX and Royal Caribbean can be reached.

STX had previously built the first two Oasis class cruise ships for Royal Caribbean and many reports point to STX to be the leading candidate to build this new cruise ship.  Other possibilities for building the ship include shipyards in France and Germany.

The deal between the Finnish government and STX could employ about 20,000 workers, which would be a welcome boost for the local economy given Finland's cooling economy.

STX Finland said it was disappointed at not getting the loan and would continue talks with other creditors.

We wanted to share a quick update as to what the status of Royal Caribbean ordering a third Oasis class ship is and what the negotiations are looking like.

As you may recall, Royal Caribbean announced a few months ago it was in negotiations with STX Europe shipyards in Finland to possibly order a third Oasis Class ship.  The primary issue has been securing financing for the construction of the cruise ship, which is something Royal Caribbean has looked to the Finnish government in assistance with.

Last Thursday, the Finnish government rejected Royal Caribbean's financing proposal because the state was concerned about being a guarantor for the capital.  

Yesterday and today, the shipyard has become involved in the negotiations by trying to extert pressure on the Finnish government to make a deal happen.  The shipyard is concerned that Royal Caribbean will have the ship built elsewhere, jeopardizing a lot of money and jobs for the company.

Royal Caribbean needs a loan of about 50 million euros to cover the ship construction cost.  The Finnish government is concerned about giving out big project loans using tax payer money.

On the other hand, the STX Europe shipyards could lend the money to Royal Caribbean but the South Korean ownership group of STX want the Finnish government to take on more of the risk.  STX points out that around €100 million in tax revenue will be collected during the €300 million project lifetime.

From last we heard, representatives of the STX Europe shipyards are meeting today with Finnish government as well as the Ministries of Employment and Economy.

Finnish ship building firm STX Finland is now lobbying the Finnish government on behalf of Royal Caribbean to help facilitate a deal to avoid Royal Caribbean building its third Oasis-class cruise ship in Germany or France.

STX Finland's chief operating officer Jari Anttila commented on the importance of getting a deal done, "We have asked the government to reconsider the financial settlement."

The state owned financing firm, Finnvera, has reached an impasse with Royal Caribbean to securing a loan to allow the proposed ship to be built.

STX is concerned that if a deal is not reach soon between Royal Caribbean and Finnvera, the cruise giant may look to shipyards in Germany or France as alternatives.  STX has an advantage in that the first two Oasis class ships were built there and Royal Caribbean prefers for the third ship to be built there as well.

Veteran shipbuilder Martin Saarikangas is confident that Royal Caribbean's third Oasis-class ship will be built at STX's Turku shipyard despite recent reports of an impasse between Royal Caribbean and the Finnish government in regard to financing the project.

Saarikangas commented, "I take the silence as a positive signal. If history is correct, there is sure to be something pending.  The situation is not hopeless."

Finnish Economic Minister Jan Free Mount and Defense Minister Carl Haglund refused to comment on the financing of the project by Finnish state-owned specialized credit institution Finnvera.

The newspaper Turun Sanomat reported on Friday that the Finnish government's economic policy rejected a proposal for funding.  Royal Caribbean is said not to have given up, but is still searching for a financial solution.

The funding for a ship like this is critical to getting the project a green light.  Ship building requires huge loans and in turn, guarantors for the line.  In most cases, the country foots the bill (and the risk) with Finnvera the lynchpin to the third Oasis-class ship being built or not.

Royal Caribbean announced in October that it was pursuing the possibility of ordering a third Oasis-class ship.

Plans to build a third cruise ship by Royal Caribbean in the STX Turku shipyard in Finland are reportedly frozen due to the fact that the funding is still completely unresolved

On Thursday, the Finnish government rejected Royal Caribbean's proposed package of financing due to the fact that the state does not want to act as a guarantor for the loan capital, according to the newspaper "Turun Sanomat."

Negotiations for financing of the new ship will continue. Other options include searching for other sources of financing. One option is that Royal Caribbean will pay for a larger chunk of the purchase price.

The value of the proposed order by Royal Caribbean is about one billion Euros. A ship order like this can provide over 12,000 ship building jobs in Turku.

Since Royal Caribbean announced yesterday that it was considering building a third Oasis class ship, one of the early question is where would it be built?

Many believe that the STX Finland's Torku shipyards are the front runner, including experienced shipbuilder Martin Saarikangas, who believes that STX Turku is in a strong position to take the order.

There are basically four options for Royal Caribbean to build the ship: Meyer Werft in Germany, Fincantieri in Italy, as well as the STX French or Finnish shipyards.

Saarikangas believes Meyer Werft is too busy, given the fact they have their hands full with existing order for a number of years to come, including the two new Sunshine Class ships Royal Caribbean has on order with them currently.

Fincantieri shipyards is a viable option but the problem with them is Royal Caribbean has never had a ship built at Fincantieri.  Royal Caribbean's chief competitor, Carnival Cruise Line, usually has their ships built at Fincantieri.

STX France had built ships for Royal Caribbean in the 1980s through 1990s, but there hasn't been an order placed with STX France in quite a long time since.

So that leaves STX Turku, which has recent experience building ships for Royal Caribbean, including the previous two Oasis class ships: Oasis of the Seas and Allure of the Seas.  Saarikangas says the design time would be shortened by a year because this would be a sister ship.  Time is of great importance since Royal Caribbean wants the new ship in 2016.

Saarikangas believes it will come down to financing.  Cruise ship building requires massive loans, and in turn guarantors.  We've heard rumors that state-owned Finnvera has already offered to back the loans for Royal Caribbean. Saarikangas says that the Turku shipyard will most likely resolve any funding problem and get the proper guarantees for the order.

Included in today's third quarter financial results, Royal Caribbean confirmed that it is in negotiations for the possible construction of a third Oasis class cruise ship that would delivered in middle to late 2016.

Royal Caribbean has not entered into any sort of agreement at this time, it does hope to place an order by the end of the year.  The new ship is expected to cost less on a per berth basis than either of the first two Oasis-class vessels.

Royal Caribbean chairman Richard Fain confirmed the news during his talks, "The Oasis of the Seas and Allure of the Seas have proven themselves to be exceptionally attractive ships by generating the highest guest satisfaction ratings in the fleet coupled with very compelling financial returns. Ordering another such ship for delivery in 2016, at a lower cost, with better energy efficiency is very consistent with our balanced goals of prudent growth, return improvement and debt reduction."

This third Oasis class ship would be in addition to the other two Sunshine Class ships Royal Caribbean has already ordered and is in the process of being built.

According to America World City  Inc, the Finnish government has agreed to provide financial backing for Royal Caribbean to build a third Oasis class ship at STX's Turku shipyard for around one billion euros.

"The Government of Finland has agreed to fund a third of Royal Caribbean cruise ship in order," said the America World City in a statement.

Finnvera, the Finnish state-owned specialized credit institution, did not comment in any way on Friday because the law prohibits them to discuss financial target confidentiality.

Turun Sanomat reported on Friday that the government's deliberations with Royal Caribbean for the cruise ship order financing will probably be postponed next week. Economic Policy of the Cabinet meeting schedules and agendas are secret.

Basically, Finnvera gives the buyer money for burrowing & guarantees the loan repayment period.  The Finnish government granted 3.0 billion euros in September in funding to Finnvera. This allows a new form of export credit financing, for the benefit of Finnish export companies to compete.

We reported on Wednesday that a newspaper in Finland claims Royal Caribbean was getting ready to order a third Oasis-class cruise ship from STX Finland's Turku Shipyard.

Royal Caribbean spokeswoman Cynthia Martinez responded to the report by saying, "It's a rumor.  We don't comment on rumors."

Martinez also added to a request by USA Today, "As we have done in the past, if/when we have something to announce, we will do so through an official company press release."

The rumored ship order stipulates that Royal Caribbean is looking for financial assistance from the Finnish government to help pay for the ship order.

If the rumor proves to be true, the third ship would be sister to Oasis and Allure of the Seas.  It would also be the third ship Royal Caribbean currently has on order, with two other smaller ships known as "Project Sunshine" under construction in Germany.

Finnish newspaper Turun Sanomat is reporting that STX Finland's Turku Shipyard is possibly close to receiving a contract from Royal Caribbean to build a third Oasis-class ship.  This would be the sister ship to Oasis of the Seas and Allure of the Seas.

The possible 1 billion Euro order hinges on if the Finnish government is willing to offer export credit construction financing. The newspaper reports the matter will be discussed at a meeting on Thursday of the Finnish Cabinet Committee on Economic Policy.

Royal Caribbean already has two other smaller ships on order, known as Sunshine Class, from a shipyard in Germany.