Troubled Liepaja steelworks 'temporarily' halts production

The joint-stock metallurgical company Liepajas metalurgs temporarily halted operations on Thursday, January 28, the company's board member Igors Talanovs told the LETA news agency Monday.

Talanov said that the decision was based on market developments. "According to the current forecasts, demand on the market will decrease about 10 percent, which is why we decided to temporarily stop buying raw materials."

KVV Liepajas metalurgs estimates that the decision will reduce the company's losses in February by €600,000.

Talanov declined to say when the company could resume operations.

As reported, after KVV Liepajas Metalurgs metallurgical company had missed a payment of €2.7 million that was due to the Latvian state in late 2015, the Treasury has started drawing on its collateral within the company.

The steel plant tried to negotiate an extension of the payment deadline but failed to meet the conditions set by the government for debt rescheduling. Therefore the Treasury started drawing on the collateral provided by KVV Liepajas Metalurgs. In particular, the Treasury invoked a guarantee issued by Russia's Alfa Bank and valid until late January.

So far the government has recovered one-fifth of the amount it had paid previously to Italian bank UniCredit when the steel plant could not repay to UniCredit a state-guaranteed loan.

Despite several false dawns, production at the plant has failed to get into full swing with questions asked about the ability of its owners to effectively manage the company which is the largest employer in Latvia's third-largest city, Liepaja.

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