Not clear whether state can recover funds from troubled steelworks

The troubled KVV Liepājas metalurgs steelworks have been missing its credit payments, and it's not clear whether the state will be able to recover its funds from the company, Economics Minister Arvils Ašeradens told Latvian Television Tuesday.

He said that one of the current plans is 'canning' the company, or halting operations. The decision over the future of the company is expected next week.

The minister will visit Brussels this week where talks will be held about possible state support for the company.

The minister admitted that it isn't clear whether the state will be able to recover funds from the indebted steelworks, even though the state has recovered part of the company's outstanding debt. The management of the debt is to be handed to the Latvian Privatization Agency.

"It's clear that the current plan with the shareholder has failed. And we are looking for other solutions," said Ašeradens.

LETA reported that on March 1 KVV Liepajas Metalurgs submitted to the Treasury a restructuring plan as requested to do so by the Latvian government at the beginning of February. 

KVV Group is considering possible suspension of operations at KVV Liepajas Metalurgs and conservation of the steel plant, if the Latvian Cabinet of Ministers did not make any constructive decisions during its March 15 meeting.

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.

Liepajas Metalurgs was declared insolvent and later sold to Ukrainian investors, KVV Group. Liepajas Metalurgs was renamed KVV Liepajas Metalurgs and officially re-opened on March 6, 2015, but soon started having problems again.

In late December, 2015, it missed a payment of EUR 2.7 million to the Treasury, one of the installments to be paid to the Latvian government over the next 10 years, and asked the government for a two-year extension of the payment deadline.

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