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Privatization Agency tasked with negotiating restructuring of KVV Liepajas Metalurgs

BC, Riga, 23.03.2016.Print version
The government of Latvia on March 22nd decided to task the Privatization Agency (PA) with negotiating the restructuring of KVV Liepajas Metalurgs metallurgical company and did not rule out a rescheduling of the company's debts, informs LETA.

Talking to the press after today's Cabinet meeting, Finance Minister Dana Reizniece-Ozola (Greens/Farmers) said that, when it comes to handling such deals, the PA is more professional than the Treasury.

 

The government also ordered the PA in collaboration with the Treasury to draw up a report by June 1 on progress achieved in the restructuring of KVV Liepajas Metalurgs.

 

Economics Minister Arvils Aseradens (Unity) said that a company established by the PA will enter talks with KVV Liepajas Metalurgs to reach an agreement on how the government will be repaid its EUR 60 million loan to the metallurgical company.

 

PA board chairman Vladimirs Loginovs informed that the agency will set up a special company in charge of the issues concerning the rescheduling of the KVV Liepajas Metalurgs debt. The company will be established and its name announced soon, Loginovs said.

 

By June 1, the PA is expected to come up with a solution that would allow the government to recover the money loaned to KVV Liepajas Metalurgs in a foreseeable future. "The idea is to return to a normally performing loan. This might also mean working out a new payment schedule," said Loginovs.

 

Prime Minister Maris Kucinskis (Greens/Farmers) said after the Cabinet meeting that the government has to ensure a strong supervision of KVV Liepajas Metalurgs.

 

Kucinskis also stressed that KVV Liepajas Metalurgs cannot be written off as a failure as the company's troubles can largely be blamed on a crisis in Europe's metal industry. The prime minister believes that the company still can be rescued by implementing a successful restructuring plan or attracting an additional investor or partners.

 

The government wants the KVV Liepajas Metalurgs plant to be re-launched and not to sell the collateral.

 

KVV Group announced last week 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.

 

KVV Liepajas Metalurgs plans to fire around 300 employees, but will keep 100 employees on duty.

 

KVV Liepajas Metalurgs, based in Liepaja port city in soth-western Latvia, has been struggling with financial trouble lately. The company's management has blamed the difficulties on a high electricity price and complicated situation in Europe's metal industry. The company has had difficulties paying its electricity bills and wages to workers. It has also missed the deadline for a payment it was supposed to make to the Latvian state for the Liepaja-based plant. KVV Group, which acquired Liepajas Metalurgs under an agreement signed on October 2, 2014, is supposed to pay for the plant EUR 107 million in several installments over the next 10 years.






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