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KVV Liepajas Metalurgs has until March to come up with restructuring plan

BC, Riga, 03.02.2016.Print version
Joint-stock metallurgy company KVV Liepajas Metalurgs has until March 1, 2016 to come up with a restructuring plan, State Treasury head Kaspars Abolins told members of the press after yesterday’s government meeting, informs LETA.

He said that the government made no decision in regard to KVV Liepajas Metalurgs' obligations. However, the company has until March 1 to come up with a restructuring plan.

 

Abolins said that KVV Liepajas Metalurgs is still speaking about state assistance in regard to reducing its electricity bills, rail tariffs etc. However, he added that the company is informed about the state's support possibilities, that is why the only talk at the moment could be in regard to the repayment schedule.

 

''In order to get to discussing this repayment schedule, we have to known how the company intends on restructuring its work so that it could pay its creditors,'' Abolins emphasized.

 

As reported, KVV Liepajas Metalurgs temporarily halted operations last week, the company's board member Igors Talanovs told LETA.

 

Talanov said that the decision was based on market developments. "According to the current forecasts, demand on the market will decrease about 10%, which is why we decided to temporarily stop buying raw materials."

 

KVV Liepajas Metalurgs estimates that the decision will reduce the company's losses in February by EUR 600,000.

 

Talanov declined to say when the company could resume operations.

 

KVV Liepajas Metalurgs may have problems with current assets after the Treasury exercises its right to assets the company has pledged as collateral, Talanov previously told LETA.

 

This is what the Treasury did on January 26, reducing KVV Liepajas Metalurgs' obligations to the state by EUR 10.7 million in total. The company believes that such unexpectedly aggressive move by the Treasury, representing the State of Latvia as the largest creditor of the company, will impact the company's relations with customers and suppliers, and make the company's operations difficult.

 

LETA also reported, after KVV Liepajas Metalurgs missed a payment of EUR 2.7 million that was due to the Latvian state in late 2015, the Treasury has started drawing on the collateral.

 

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.

 

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.






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