Liepajas metalurgs priced too high, says Sesks

  • 2014-02-05
  • From wire report

FOR SALE: Liepaja’s mayor Uldis Sesks argues that the asking price for bankrupt company Liepajas metalurgs is “too large to be taken seriously,”

RIGA - Haralds Velmers, insolvency administrator for bankrupt metallurgical company Liepajas metalurgs, is planning to sell the company’s casting and forging facilities, technical equipment, real estate and movable property necessary for the company’s operations, which will be offered to qualified buyers internationally so as to raise as much money as possible from the deal, reports
According to the latest assessment of the company, selling the property that has not been pledged as security may raise 3.5 million euros without the need to organize an auction, plus 1 million euros that will be raised by selling assets at auction.

In selling the other assets, which the company has set up as security for various loans, it is hoped to raise 112.3 million euros, said Velmers, adding that these projections may be revised during the sales process and based on offers received from prospective buyers.
On Jan. 20, Velmers presented Liepajas metalurgs shareholders with the company sales plan. Velmers will be able to begin selling the company assets only if the creditors approve the plan, with a decision expected this month. If the plan is not accepted by the creditors, Velmers will have to alter it.
He notes that his proposal will make it possible to better assess prospective buyers, which is not always possible if an auction is organized.

Liepaja Court commenced Liepajas metalurgs’ insolvency process on Nov. 12 last year. Velmers was appointed insolvency administrator. Over 1,500 Liepajas metalurgs workers have been laid off so far.
Liepajas metalurgs halted production last spring. In July 2013, the State Treasury repaid from the state budget the principal amount of the loan owed to the Italian bank UniCredit by Liepajas metalurgs, in the amount 67,465,056 euros (47,414,711 lats).

Worker training
For the city of Liepaja, and its former workforce, the saga continues. About a third, or 363 of former company workers, who have registered with the State Employment Agency, currently attend various training courses, and just 45, or less than 4 percent of workers laid off after Nov. 15 last year have found new jobs, said the Employment Agency.
Overall, 1,181 former workers laid off by the company have registered with the Liepaja branch of the Employment Agency.
Most of the former Liepajas metalurgs workers are not very active in looking for a new job, instead hoping that the company will resume operations in May, said the Employment Agency’s representative Iveta Kancena. Those who have found new jobs work in various professions, including as electricians, metalworkers, in the wood processing industry, and others.

There still are many companies in Liepaja and elsewhere in Latvia that are willing to review job applications from Liepajas metalurgs workers, said Kancena. She went on to say that those who found jobs outside Liepaja could apply for the so-called mobility benefit.
In the meantime, most of the former workers have signed up for Latvian language courses, currently attended by 191 people. Another 85 participate in various informal education programs, for instance, to learn foreign languages or computer skills, 49 attend retraining programs to learn the profession of, for instance, tailors, auto mechanics, welders. Eleven go to tractor driver courses and 27 attend automobile driving classes.
But obstacles remain in recovering operations. In an interview with Rietumu Radio on Jan. 28, Liepaja Mayor Uldis Sesks (Liepaja Party) said that it will not be possible to sell the company at the price mentioned by the insolvency administrator (112.3 million euros).

“The sum that has been mentioned is too large to be taken seriously,” argued Sesks. He pointed out that potential investors would have to invest over 30 million euros to renew production. “In exaggerating the sale price, investors will come to the conclusion that it is cheaper to build a new factory from scratch or buy a similar company already in operation somewhere else in Europe.”

“The longer this process drags out, the less chance a serious investor will pop up,” he added.
Creditors are knocking on the door. The total amount of claims has reached 194 million euros, says Velmers.
Recognized claims have reached 194,037,412 euros, including secured creditor claims of 114,839,710 euros, and unsecured creditor claims of 79,197,701 euros.
Creditors have until May 13 to submit their claims.