Employment, Latvia, Legislation, Markets and Companies, Metals Market

KVV Liepajas Metalurgs board member Igors Talanovs said that the plant is like a live organism and it may not be put on a standby mode for too long that would bring to irreversible processes. So far more than 100 people have left the company, but by the end of this months another 150 people will be laid off.

"We risk to lose qualified workers irreversibly – people with years of experience," said Talanov, adding that it will make revival of the production process in the future more difficult.

The Latvian Treasury has concluded the cession agreement with FeLM, a subsidiary of the Privatization Agency, which has been established in line with the government's decision to allow Privatization Agency to set up a company tasked with managing the KVV Liepajas Metalurgs debt to the Latvian state. The decision was based on recommendations provided by Deloitte Latvia.

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.

KVV Liepajas Metalurgs, based in Liepaja port city in south-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.