Struggling dairy firm given repayment holiday

A major Latvian dairy firm hit hard by Russia's food embargo was granted a repayment holiday on its outstanding loans at a meeting of the Latvian cabinet Tuesday, reported the BNS newswire. 

Latvijas Piens, a dairy company established by several Latvian dairy cooperatives, was granted a six-month reprieve.

The decision will allow the dairy company to postpone the repayment of a loan granted by Latvia's SEB Banka.

According to information submitted to the Treasury, in June 2011 the finance minister on behalf of the Latvian state issued a guarantee for a €7m loan Latvijas Piens was taking to develop export-oriented dairy products.

As at July 24, 2015, the outstanding part of the loan was €5million, which the company is due to repay in monthly installments by November 25, 2019. Under the new arrangement, the postponed payments will have to be made in one installment in December 2019.

Latvijas Piens board chairwoman Anita Skudra told BNS that the loan repayment holidays will ensure that the company will be focused on export development. "It means that in the coming six months we are able to focus on production and development of exports. I have underscored already earlier that Latvijas Piens is viable, but it needs time on development because it is not easy for a new company to work at a time when the dairy industry is facing crisis," said Skudra.

Latvijas Piens has run into financial difficulties due to the generally complicated situation in the Latvian dairy industry. One of the company's co-owners, Trikata KS dairy cooperative, plans to sell its 53.66 percent stake in Latvijas Piens which owes the cooperative €3m. A number of local and foreign buyers, including Latvia's Latraps agricultural cooperative which already owns a stake in Latvijas Piens, have expressed interest in the Latvijas Piens shares.

According to preliminary figures, Latvijas Piens generated €28m in turnover in 2014, down 23.9 percent on 2013.

Latvijas Piens was established by four Latvian milk cooperatives: Trikata KS, Dzese, Latraps and VAKS.

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