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Danes threaten to stop investment

  • 1999-08-26
VILNIUS (BNS) - Danisco Sugar, the owner of large stakes in the Lithuanian sugar industry, has threatened to halt investments in modernization of the coun-try's sugar refineries if the ailing Marijampole Sugar is not closed down.

The Kaunas regional court opened bankruptcy proceedings against the debt-laden sugar producer in June of this year. Farmers, who own almost 50 percent of Marijampole Sugar, have been seeking the com-pany's rehabilitation.

The Danes, who hold 49.13 percent of Marijampole Sugar, have said repeatedly that it is unreasonable to invest in the bankrupt factory with out-of-date equipment.

Of four Lithuanian sugar factories, only two are operating - in Panevezys and Kedainiai. The Danish investors insist that Lithuania does not need more than two refineries.

Auditors from the international firm Arthur Andersen have also recommended closing the Marijampole factory down after an audit of the company.

The central government has refused to provide financing for the factory's rehabilitation despite several protest actions staged by former managers of Mari-jampole Sugar and farmers to press their demands.

A local fertilizer producing and selling firm, Arvi, has offered to help farmers to work out a rehabilitation plan for Marijampole Sugar.

The refinery's creditors are expected to decide the factory's fate at their meeting on September 30.

Marijampole Sugar's debts currently amount to 32 million litas ($8 million), including some 16 million litas owed to the state-run mandatory social insurance fund, Sodra.