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Russian investor refuses to buy cannery

  • 2001-05-31
  • BNS
REZEKNE - A potential investor in the Latvian milk cannery Rezeknes Piena Konservu Kombinats has decided not to invest in the concern, the company reported.

The Russian company Erkonprodukts had inquired about acquiring shares in either RPKK or a Ukrainian company.

The milk cannery's board chairman Andrejs Jermolajevs said at a recent shareholder's meeting that the company is still looking for potential investors.

Shareholders also discussed the loan agreement with Latvijas Unibanka, which expired April 30, but no final decision has been reached yet as to whether signing a new agreement with the bank or extending the current one.

The milk cannery's board had offered the company's thermal power plant and heating network as security for the 2.8 million lat ($4.44 million) loan, but Latvijas Unibanka rejected the deal.

After receiving a request to extend the loan agreement, the bank asked the company to prove it would be able to generate a return on the loan. Board member Anatolijs Tucs has been authorized to negotiate with other banks on re-lending the outstanding loan.

Tucs told shareholders that at the moment, documents have been submitted to Parex bank.

Under RPKK's 2001 budget, approved by shareholders a month ago, the cannery losses for this year are estimated at 720,000 lats. The company plans to have revenues of 3.38 million lats and expenditures of 4.10 million lats for 2001.

In 2000, the cannery was 3.12 million lats in the red on a net turnover of 6.69 million lats.

Another blow to RPKK's image was received recently when the Latvian State Veterinary Service suspended canned milk production at the plant. According to what veterinary service Director Vinets Veldre told BNS, the state service had found intestinal bacillus at the milk cannery's facilities

Jermolajevs, however, said May 28 that the company's production facilities had been cleaned and disinfected, and that RPKK had been allowed to resume production.

He said the suspension in production caused no loss to the company because it had piled up a surplus.

The cannery produces butter and canned milk, the latter accounting for some 75 percent to 80 percent of its total output.