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The steel plant tried to negotiate an extension of the payment deadline but failed to meet the conditions set by the government for debt rescheduling. Therefore the Treasury started drawing on the collateral provided by KVV Liepajas Metalurgs. In particular, the Treasury invoked a guarantee issued by Russia’s Alfa Bank and valid until late January.

Kaspars Abolins, the head of the Treasury, told LNT that the bank, as requested, had paid the full amount of the guarantee and the Treasury had received over EUR 10.7 million on January 26. This covers not only the EUR 2.7 million payment for 2015 but also EUR 7.5 million that the company is to pay to the Treasury this year. The outstanding liabilities of KVV Liepajas Metalurgs to the Latvian state have been reduced accordingly.

So far the government has recovered one-fifth of the amount it had paid to Italian bank UniCredit when the steel plant could not repay to UniCredit a state-guaranteed loan.

The Treasury continues the talks with KVV Liepajas Metalurgs about changes in the debt repayment schedule. „They did not comply with the old schedule, and we need to negotiate a new schedule,” Abolins said, adding that the government expected constructive proposals and, of course, some help on part of the steel plant’s owner regarding the working capital.

KVV Liepajas Metalurgs representatives declined any detailed comments to the LNT television today, saying only that for now they were doing business as usual.

KVV Liepajas Metalurgs last year posted EUR 73 million in turnover, while the company's loss reached EUR 8 million.

Liepajas Metalurgs metallurgical plant based in the Liepaja port city in south-western Latvia halted production in spring 2013 and was unable to repay a state-guaranteed loan that it had taken from the Italian bank UniCredit. In July 2013 the Treasury paid off the entire loan or EUR 67.465 million from the state budget.

Liepajas Metalurgs was declared insolvent and later sold to Ukrainian investors, KVV Group. Liepajas Metalurgs was renamed KVV Liepajas Metalurgs and officially re-opened on March 6, 2015, but soon started having problems again. In late December, 2015, it missed a payment of EUR 2.7 million to the Treasury, one of the installments to be paid to the Latvian government over the next 10 years, and asked the government for a two-year extension of the payment deadline.