KVV Group has decided to freeze assets of KVV Liepājas metalurgs. «This decision was made, considering standing long-term negative factors that prevent the company’s function – crisis in the world metallurgy market, outstanding debts before creditors and the lack of interest from the state to support the industry,» – notes the company.
In recent months, shareholders of the company tried their best to restore production and establish a constructive dialogue with the government in spite of difficulties. Shareholders developed a restructuring plan for the company’s debts and waited for a reasonable response from the government in regards to the application of a reduced mandatory procurement component, as reported by the company.
«Our decisions were driven by the belief that shareholders and the state have a single goal – to preserve one of the largest tax payers in the country, develop the metallurgy sector and black metallurgy processing industry, as well as maintain jobs for hundreds of people,» – notes KVV Liepājas metalurgs board member Igor Talanov.
«Unfortunately, what we received was the distancing of state officials from problems in the company. The number of questions asked in the letter of the State Treasury and openly negative statements addressed to the proposed restructuring plan even before its review made it difficult for shareholders to understand when it may be possible to find an appropriate dialogue with the government,» – said the company’s representative.
According to him, KVV Group’s investments department had organized an independent audit at KVV Liepājas metalurgs in November 2015. Results of this audit showed that the company’s worth in 2015 was significantly lower than its procurement worth.
«Information regarding results of the independents audit was provided to all sides – State Treasury, Finance Ministry and the Cabinet of Ministers. In spite of that, some officials continued using outdated information in regards to the company’s financial state, which greatly confused the company’s shareholders. Considering that shareholders had invested more than EUR 50 million in KVV Liepājas metalurgs in 2014 and 2015, as well as all of the aforementioned negative factors, it has been decided to freeze the company’s function,» – as reported by the company.
On 1 March, KVV Liepājas metalurgs submitted its business restructuring plan to the State Treasury. The government had requested this plan at the beginning of February. This plan details the repayment schedule of KVV Liepājas metalurgs’ debt of EUR 70 million.
On Friday, 19 February, Latvijas Gāze’cut off gas supply to KVV Liepājas metalurgs, as confirmed by LG. This decision was made following the company’s inability to pay off its debts for previous gas supplies.
Because the debt remained unpaid on Thursday, 18 February, KVV Liepājas metalurgs’ total debt kept increasing and continues to increase. In addition, KVV Liepājas metalurgs has not yet signed an agreement in regards to gradual repayment of the debt.
Gas supply will be restored as soon as all debts have been paid.