Financial Services, Latvia, Machinery construction, Markets and Companies, Railways, Transport

He said it was too early to speak about issuing any state guarantees to DLRR.

The company has to prepare a restructuring plan and a business plan so that the government could examine the situation, Kucinskis said.

As reported, DLRR, the train engine repair group based in the southeastern Latvian city of Daugavpils, has asked for state guarantees to secure a bank loan after it had failed to reach an agreement with Swedbank regarding extension of loan agreements terminating this year and potential default of liabilities towards the bank. The refusal has been caused by the financial situation in the plant and the lack of confidence of the bank regarding increase of order volumes.

The difficult situation in relations between Russia and the EU led to sharp decrease of orders from the Russian market, DLRR said.

Latvian Finance Minister Dana Reizniece-Ozola (Greens/Farmers) is skeptical about the possibility of issuing state guarantees to DLRR. The company has the right to request state support, but the government has to revise all possibilities before making the decision, she said.

DLRR closed the first half of 2016 with EUR 6.17 mln in turnover, which dropped 0.7% from the same period last year, and a loss of EUR 1.46 mln, which grew 9.9% y-o-y.

DLRR is quoted on the Nasdaq Riga Secondary List. The largest shareholders are Estonia's Skinest Rail with 47.97% and Estonia's Spacecom (25.27%), which belongs to the Russian transport group Severstaltrans.