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International Internet Magazine. Baltic States news & analytics Friday, 25.07.2014, 23:34

Zaharjins: Liepajas metalurgs rescue in the hands of the state

BC, Riga, 20.05.2013.Print version
The rescue of the joint-stock metallurgical company Liepajas metalurgs (LM) is in the hands of the state, and the talk about a potential investor restoring LM operations in a day's time is complete nonsense, LM largest shareholder Sergejs Zaharjins points out in an interview with the newspaper Diena, cites LETA.

According to Zaharjins, the crisis in the metallurgical industry is the main reason behind the company's problems. LM, just like the other metallurgical companies, did not expect the global metallurgical market to collapse even further and the crisis deepen in 2012. In Latvia, these developments were also connected with the crisis in the construction sector. LM main export products are steel rebars, which are used to make reinforced concrete. Therefore the company is tied to the global construction sector. Unfortunately, especially at the end of the second quarter of 2012, the global construction sector was shrinking even more rapidly than before, says the businessman.

 

At the moment, survival is the main focus of all metallurgical companies. The question is how long the crisis will continue and who will be able to make it through. All metallurgical companies are asking for help from their governments and banks, and the largest companies have already received help from their governments and banks. Due to the lack of current assets, refinancing is the main problem. Those companies that are able to ensure current assets continue operations, explains Zaharjins.

 

Zaharjins is convinced that LM still has a market. However, the company's output increased significantly after reconstruction, and the European market became too small for the company. The U.S. market was closed to LM due to the anti-dumping process. Therefore the company was forced to sell some of its production in Algeria for unfavorable and smaller prices than in Europe.

 

The mandatory procurement component is also an additional burden, adds the businessmen.

 

Asked about potential solutions for LM, Zaharjins emphasizes that the company is in need of current assets. He also lauds the establishment of LM creditors' club, coordinated by the consulting company Prudentia. The club could save the company, since it consists of the State Treasury, Latvenergo, Citadele, SEB and Stemcor. Undoubtedly, the main creditor is the State Treasury. Therefore Zaharjins believes that the company's rescue is in the hands of the state.






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