Steelworks suitors success suspect, say sector experts

Take note – story published 9 years ago

Neither of the final potential pair of investors vying to purchase Liepāja’s insolvent and government-credited steelworks Liepājas metalurgs inspires confidence in their ability to restore operations at the troubled plant, say experts surveyed by LTV news program Panorāma Tuesday.

The two firms – Luxembourg-registered United Group, belonging to Russian investor Igor Shamis; and Ukraine’s KVV Group, belonging to Valery Krishtal and Yevgeny Kazmin were announced as signatories to letters-of-intent as the final non-binding bidders August 29 by the company's insolvency administrator Haralds Velmeris.

The publically available information about these entities is scarce, say experts. According to journalist Anatoly Jumailo of newspaper Komersant, Shamis owns no such metalworks in the Russian Federation, nor is there much information about his business partnerships there.

“He only owns one machine-building plant,” the Komersant reporter noted.

Shamis himself denied claims reported by Komersant that his also bankrupt Pilsen Steel factory in the Czech Republic was no longer under his control.  

“I’ve managed to restructure all of the debts prior to my taking over ownership, as well as reorganize the production cycle. Pilsen Steel is a successful and growing enterprise,” Shamis insisted.

Even less is known about the second bidder KVV Group. Its owners offer no comment on their interest in Liepājas metalurgs, however are known to be veterans of the region’s scrap-metal and real estate businesses.

Former Ukrainian economics minister Vladimir Lanovoi expressed doubt in the pair’s capacity for raising the Liepāja plant back into full operation.

“You need investment to renew solvency. The situation in Ukraine is complicated right now. The value of the grivna is plunging. To hope these would be Ukrainian financial sources… They’ll most likely be off-shore schemes, thus totally casting shadows over the true beneficiaries of the deal. Who’s to say the firm isn’t just an official front behind which Russian owners are actually standing,” the former Ukrainian state official suggested.

Superia brokerage expert Mārtiņš Krūtainis also noted the lack of sufficient background information given the state’s interest as a creditor of the insolvent enterprise, whose former owners failed to convince the government to bail it out in January 2013, then left it holding the bill for €67.4m in unpaid credit guaranteed by Italy’s UniCredit bank in July.

By November 2013 the plant’s more than 1000 workers had received notice that they would soon be left jobless by a full shutdown of operations.



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