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

Information from the Insolvency Register suggests that the administrator has submitted an updated plan for selling the steel company’s assets. Insolvency administrator Guntars Kronis has extended the asset sale schedule to agree purchase agreements with the company’s secured creditors and take the final decision about the company’s investor (buyer). The extension was also needed to let the investor’s representatives obtain visas for a trip to Latvia at the end of August.

September 29, 2017 is now the deadline by which the company’s pawned assets have to be sold.

Hmielevskis said that the talks with the potential buyers have reached the final stage and are very active, which is why no further information would be given for now.

As reported, in June this year August 16 was set as the deadline for sale of KVV Liepajas Metalurgs assets.

Economics Minister Arvils Aseradens (Unity) said in May that six potential investors had submitted non-binding offers and the government has given the green light to further negotiations. Aseradens voiced cautious optimism about chances of re-launching the steelworks.

The Liepaja Court declared KVV Liepajas Metalurgs insolvent on September 16, 2016.

The government in May 2016 rejected the debt restructuring proposals by KVV Group, the Ukrainian owners of KVV Liepajas Metalurgs, saying that the proposals envisaged significant participation of the Latvian state in the metallurgical company without handing over control over the company, tax discounts and other measures that might be interpreted as unlawful state aid.

The government also authorized the Latvian Privatization Agency (LPA) to establish a company, FeLM, to which the State Treasury will assign its claim against KVV Liepajas Metalurgs. The steel plant owes EUR 65 million to the Latvian state.

Liepajas Metalurgs metallurgical plant based in the Liepaja port city in south-western Latvia was first declared insolvent after it failed to repay a state-guaranteed loan to an Italian bank. The government sold the plant to Ukrainian investors, KVV Group, in late 2014.

Liepajas Metalurgs was renamed KVV Liepajas Metalurgs and officially re-opened on March 6, 2015, but soon started having problems again. The company had difficulties paying its electricity bills and wages to workers. It also missed the deadline for a EUR 2.7 million payment to the Latvian state, an installment for purchase of the steel plant.