Tolaram's future in doubt

  • 1999-09-23
DAUGAVPILS (BNS) - The City Council in the eastern Latvian city of
Daugavpils asked to borrow $6 million from the state to re-open the
Tolaram Fibers chemical company, but the Finance Ministry says the
money will not be available this year.

Municipalities are only allowed to take loans from the State
Treasury, but most of the funds allocated for such loans have already
been used, said Baiba Melnace, a spokeswoman for the Finance
Ministry. Moreover, she said the state had not yet assessed the
Daugavpils City Council's ability to repay so large a credit.

The Finance Ministry had not received any documents indicating
Daugavpils' wish to obtain the credit, Melnace said. She said that
the local government could get the credit from other sources, but in
that case, the terms must be more favorable than those offered by the
state and special approval by the finance minister was required.

The City Council's ruling to ask for the loan on Sept. 16 came after
employees staged massive protest actions in Daugavpils and Riga,
outside the offices of the Latvian Privatization Agency and Unibanka,
the company's largest creditor.

Daugavpils Mayor Aleksey Vidavsky said the City Council's decision
was not influenced by the protests, but trade union leader Vladimirs
Novikovs said the actions staged this week and the previous week had
a large effect.

"It was felt yesterday in Riga judging by the way the Latvian
Privatization Agency and Unibanka officials were talking to us and by
the high interest from the media," he said.

Currently there is an insolvency claim against Tolaram Fibers filed
with the court. The company's administrator is barrister Lidija
Skreija.

The insolvency claim was filed in Latgale District Court by Stalkers
company, one of Tolaram Fibers' creditors. Stalkers also has
expressed readiness to buy the plant.

Tolaram Fibers owes large sums to its creditors and employees, who
have gone without wages and social tax contributions, therefore the
company's operations have been suspended.

Tolaram Fibers belongs to the Singapore-based Tolaram Group.

Both the company's employees and Daugavpils municipality have
expressed dissatisfaction with the activities of Tolaram Group.

At this point a working group has been established that was scheduled
to meet at LPA's offices Sept. 20 to discuss rehabilitating the
factory.

Baiba Melnace said the municipalities can borrow only from the State
Treasury. If the municipality has found a possibility to borrow on
better terms it needs a special endorsement from the finance minister.