EU – CIS, Latvia, Legislation, Markets and Companies, Metals Market

KVV Group points out that filing a lawsuit against the state of Latvia with an international court of arbitration is the only way how the company can protect its reputation and an investment of over EUR 35 mln in KVV Liepajas Metalurgs. KVV Group attorneys are in the final stages of gathering evidence to be brought to the court.

"Manipulation of collateral properties, past debts that were forced upon KVV Group, demanding a financial guarantee of EUR 13 mln, unilateral talks with potential investors all suggest that government officials have been doing everything in their power to make the legal owners of KVV Liepajas Metalurgs leave," says KVV Group.

At the same time, KVV Group is doing everything in its power to reach an out-of-court settlement.

As reported, Liepaja Court on June 30 decided to start a legal protection proceeding in respect of the financially troubled KVV Liepajas Metalurgs metallurgical company, court spokeswoman Velga Luka told LETA.

With the opening of the legal protection proceeding, the court suspended the insolvency proceeding started against KVV Liepajas Metalurgs based on a claim filed by G4S Latvia security company.

KVV Liepajas Metalurgs is to produce to the court by August 30 a plan of legal protection measures aimed at rehabilitation of the company and approved by the creditors.

As reported, the Latvian government on May 17 and May 24 reviewed the report prepared by the Latvian Privatization Agency (LPA) and FeLM, a company established by the LPA to which the State Treasury will assign its claim against KVV Liepajas Metalurgs, in cooperation with the economics and finance ministries. It was concluded that the debt restructuring proposals by KVV Group, the Ukrainian owners of KVV Liepajas Metalurgs, are unacceptable and other solutions have to be found for revival of the steel plant.

The proposals by KVV Group include significant participation of the Latvian state in the metallurgical company without handing over control over the company, tax discounts and other measures that might be interpreted as unlawful state aid.

Ukraine's KVV Group announced in late March it had been forced to take a decision on the conservation of KVV Liepajas Metalurgs steel plant because the negative factors hampering the company's operations - the crisis in the global metal industry, the company's debts to secured creditors and the Latvian government's reluctance to provide assistance to the industry - were persisting.