Steelworks buyers still being sought

Potential investors in the insolvent KVV Liepajas Metalurgs steelworks are from other countries, said Latvian Economics Minister Arvils Aseradens (Unity party) in an interview with Latvian public television on August 15.

He said that talks with potential investors might soon be concluded.

"I hope we will be able to announce good results," the minister said.

At the same time, Aseradens said that KVV Liepajas Metalurgs is not a small company, it has serious problems, therefore the interested parties have many questions.

As reported, Economics Minister Arvils Aseradens 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 of Laimdota Straujuma sold the plant to little-known 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.

As previously reported by LSM, the sale to KVV Group was a false dawn that became a disaster and any repeat of the process would severely damage the government of Maris Kucinskis.

Traditionally the steelworks is a major employer in Liepaja.

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