Financial Services, Latvia, Legislation, Markets and Companies, Metals Market

The management of KVV Group believes that in a situation in which KVV Liepajas Metalurgs has been forced to work in a business environment for quite a while in which the state has just a formal attitude towards the company's objective problems and a constructive dialogue has been constantly been put on hold, the company could be forced make the decision to preserve the Liepaja factory.

The company points out that KVV Liepajas Metalurgs has received no support from the state in 2016, and has only encountered more problems. This includes the decision by creditors to invoke a guarantee, which as a result the State Treasury received over EUR 13 million of the company's guarantee. At the same time, a court has frozen EUR 300,000 of the company's funds.

''All of this has negatively impacts the available finances of the company, as well as has created a negative image of the company. Furthermore, all of KVV Liepajas Metalurgs' requests to prevent the company's insolvency have been ignored by creditors,'' a company spokeswoman told LETA.

KVV Group points out that KVV Liepajas Metalurgs posted EUR 8 million in losses last year, and losses for 2016 in the current situation could be at around EUR 5 million.

The company points out that as the crisis in the metallurgical sector continues, while at the same time the price of electricity is double of what it is elsewhere in Europe, KVV Liepajas Metalurgs is not able to operate in such circumstances, as it just continues losing money.

As reported, KVV Liepajas Metalurgs submitted last week a restructuring plan to the State Treasury, which the government had requested at the beginning of February.

Now, the documents submitted by the company will be evaluated by specialists from the State Treasury in cooperation with experts from audit company Deloitte Latvia.

After this, the State Treasury will give its conclusions regarding the submitted plan, which will then most likely be reviewed by the government to make a decision on whether or not to support it.

LETA also reported, Treasury head Kaspars Abolins said after the Cabinet meeting on February 2 that KVV Liepajas Metalurgs had to produce a restructuring plan by March 1 in order to to continue the talks about debt rescheduling.

KVV Liepajas Metalurgs missed a payment of EUR 2.7 million that was due to the Latvian state in late 2015 and tried to negotiate an extension of the payment deadline but failed to meet the conditions set by the government for debt rescheduling.