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Investor search for bankrupt Liepāja steelworks starts February

The sales procedure of the bankrupt Liepāja steelworks will start in February, and the insolvency administrator is to contract 'EY', formerly known as Ernst & Young to find the investor, Dzintars Hmielevskis, a representative of the administrator told LETA.

Guntars Koris, the administrator of the insolvent KVV Liepajas Metalurgs steel plant will complete the sale plan by the end of January.

"By the end of January, evaluation of the company’s property will be completed, and the sale plan will be ready. It has to be coordinated with the creditors, therefore the official sale procedure will start in February," said Hmielevskis.

The administrator is to sign an agreement with EY on finding potential investors in the coming days.

Investors already now are showing interest in the company and some of potential investors have visited the company. "The world’s metallurgy market is changing and Liepaja’s company is becoming more interesting for the company," Hmielevskis said.

Creditors have claims to the insolvent KVV Liepajas Metalurgs totaling more than €116.587 million.

Of these, claims by 19 legal entities for a total of €88.287 million were found to be substantiated but five legal entities claiming altogether €27.577 million have been asked to submit additional documentation.

The insolvency administrator has also received claims from 395 employees of KVV Liepajas Metalurgs totaling around €722,800. The steelworks was a major source of jobs in Latvia's third-largest city Liepāja.

The total amount of secured creditor claims is €86.935 million, and the claims by unsecured creditors add up to €29.652 million.

LETA also reported, the Liepaja Court declared KVV Liepajas Metalurgs insolvent on September 16 last year and appointed Koris as the insolvency administrator.

The government in May last year rejected the debt restructuring proposals by KVV Group, the Ukrainian owners of KVVLiepajas 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 to which the State Treasury will assign its claim against KVV Liepajas Metalurgs. The steel plant owes €65 million to the Latvian state.

KVV Group said it was preparing to sue Latvia in the European Commission's Anti-Monopoly and Corruption Prevention Committee, which could lead to Latvia being hit with a penalty of between €150 million to 300 million.

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