RIGA - The faltering metallurgical company Liepajas metalurgs is very likely to become insolvent, Latvian Finance Minister Andris Vilks said in an interview with the Dienas Bizness newspaper. This does not mean, though, that the company cannot be “brought back to life,” and there still is a chance that Liepajas metalurgs will resume operations, he added.
The question is how long it will take, and what is the best way to achieve this. The minister believes that an investor will be found “sooner or later” for the company.
Underwriting a large loan for “Liepajas metalurgs” was a political mistake; however, Vilks believes that there is nothing to reproach officials and the State Treasury for.
Liepajas metalurgs did not receive a 10 million lats (14.2 million euros) loan from prospective investors by Sept. 30, a violation of its legal protection process plan. On Oct. 1, a thirty-day period began during which all the past violations can be corrected if the company receives the loan and finds an investor.
The total amount necessary for implementation of the legal protection process plan is 37 million lats, and the company must receive this amount by no later than Dec. 31, Liepajas metalurgs’ insolvency procedure administrator Haralds Velmers said previously. Of this amount, Liepajas metalurgs was supposed to have received 10 million lats by Sept. 30.
The financially-troubled company has halted production. In July, the State Treasury repaid, from the state budget, the principal amount of a loan owed to the Italian bank UniCredit by Liepajas metalurgs - 67,465,056 euros. As part of the legal protection process, approved by the Liepaja Court, Liepajas metalurgs plans to take measures to increase production and sales volumes, focusing on markets in the vicinity of Latvia that offer better prospects. The legal protection process plan also stipulates more professional market analysis at the company so the company could plan flexible sales and higher profits. In order to ensure additional incomes during implementation of the plan, Liepajas metalurgs is planning to sell assets that are not part of the company’s main business, for at least 3,765,000 lats.