VILNIUS - Workers stormed the premises of cotton textiles producer Alytus Textile on July 18 upon hearing of the board's decision from the previous night to put the company into bankruptcy. The decision will lay off approximately 1,200 workers. The company suspended manufacturing in May due to unfavorable market circumstances including increasing competition from cheap imports from China.
"This is an overdue decision, yet it has been inevitable," said Prime Minister Gediminas Kirkilas in a radio interview. He added that company management had been ineffective under previous directors. The executive suite during the first half of 2007 resembled a revolving door, as the company struggled through a succession of directors.
"Millions of litas in state support have been ineffectual" in turning around a steadily eroding situation, admitted Kirkilas. The Lithuanian government has previously attempted to rescue the company, having in December 2006 adopted a recovery plan, and injected 28 million litas (8.12 million euros) in an unsuccessful turnaround plan. Audited financials from 2006 showed losses of 8.3 million litas.
Board chairman Antanas Gediminas Adomaitis said "We have admitted that the production cannot be resumed due to numerous factors amid current economic circumstances."
The state on May 18 sold its 69.56 percent share of the company at the offer price of 358,300 litas, or less than 10 percent of the then current market price, on the Vilnius Stock Exchange as part of the privatization plan. The new owners took over and paid off outstanding debts of 1.65 million litas.
The largest single shareholders of Alytaus Tekstile, when quoted on the I-List of Vilnius Stock Exchange, are Algida Zukeviciene, the company's CEO, and Marijampoles Gelzbetonis, each with a 19.41 percent holding. The textile producer, with a par value of 1 litas per share was virtually worthless at 0.05 litas a share before trading was suspended.
Disgruntled workers rushed into the plant's premises and proceeded to occupy the office of the company's CEO, Algida Zukeviciene, who was then forced to call in the police.
"The situation has almost got out of control," said the chairman of the workers' union, Algimantas Bujanauskas. "First, the guards would not let the workers in. Later, however, they allowed them to enter. The workers went to the director's office and are talking to her. I would not say that Zukeviciene has been taken hostage, it's just that some people have come into her office."
Prime Minister Kirkilas recommended that the protesters who rushed into the office stay calm. "Pickets and vehemence would be of no help here," he said. Both protesters and Zukeviciene left the office after several hours of talks, in which trade union representatives had promised the protesting workers that they would take part in the bankruptcy proceedings and would keep company employees notified about any developments.
Despite the "grave situation," Economy Minister Vytas Navickas hopes that potential buyers can be found to take over and revive the operations. "You know that almost all assets of the company have been put in pledge, and the property will be sold off as part of bankruptcy proceedings. Perhaps there could be a chance to sell the whole workshop to a single buyer that would pursue the same activities," he added.
The company officially filed for bankruptcy on July 23. The company's debts to its employees and other creditors total some 900,000 litas and 42.2 million litas, respectively, but with balance sheet assets valued at 69 million litas, it should be able to settle.