Baltic, Construction, Financial Services, Latvia, Markets and Companies, Railways, Russia, Transport

DLRR informed in a statement to the bourse about failure to reach an agreement with Swedbank regarding extension of credit 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.

To save the company, 432 people or 45% of the total amount of employees have been dismissed since January 2015.

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

Recent large-scale modernization of production in DLRR, the aim of which was reorientation towards the European market, concurred with the crisis of international relations connected with tensed relations between Russia and the EU. Political crisis caught the plant during that difficult moment, when large funds were invested into equipment, but it was not working with its total output, the company explained.

"Likewise the company, having all chances to produce trams, electric trains and other rail transport, has no possibility to participate in the international competitions due to the lack of experience. The only way to get it is to receive the first orders inside the home country from municipalities and public companies," the company said.

Successful completion of diesel train modernization project for Pasazieru Vilciens passenger train company proves the company’s potential, and this is obvious triumph of the Latvian industry and DLRR, being one of its members, as a result of which an ultramodern train was created and Latvia returned to the elite of the world producers of rolling stock after decades of stagnation.

Understanding the responsibility towards country, city, employees and their families, in the current situation, for the purpose of saving one of the oldest companies in the country with its 150 years history, the Board DLRR turned to the government with a request to receive government guarantees for provision of bank credit.

As reported, DLRR closed the first half of 2016 with EUR 6.17 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.

The company's management said in the report that the DLRR group exported EUR 4.5 mln worth of products to eight countries in the accounting period. During the first six months of 2016, DLRR shipped its products mainly to Estonia, Poland and Lithuania, as well as non-EU countries Russia, Belarus and Uzbekistan.

During the second quarter of this year, DLRR sent the first three upgraded DR1 trains to its client Pasazieru Vilciens, Latvia's passenger train operator. The client charged a 10% fine for missing the project's deadline.

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