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Monday 23.07.2018 | Name days: Magda, Magone, Mērija
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State Treasury: LM pays back millions to creditors

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Аuthor: Evija Trifanova/LETALiepājas Metalurgs (LM) had performed a payment worth several million LVL to one of its creditors last week, as reported by the Chief of State Treasury (ST) Kaspars Abolins.

He emphasized that the criteria used by the company’s management in choosing creditors whose obligations are to be cleared are largely complicated.

The state treasury has received a letter from LM. It states that the enterprise will be unable to pay back the amount it owes the Italian bank. However, obligations before specific creditors are being cleared.

The ST has expressed its objections and has asked for explanations of this situation.

It was previously reported that LM sent a letter to ST on April 19. This letter informed the state service about the company’s inability to carry out payments to the Italian UniCredit S.P.A.

The payment is to be made on April 30. The ST was to be informed of LM’s inability to perform the payment ten days prior to this date.

The ST has received LM’s letter regarding its inability to perform the payment. The ST will perform the payment on behalf of LM in accordance with the signed state guarantee, Finance Ministry’s Communication Department manager Aleksis Jarockis reports.

Deputy Chief of ST Janis Poce had previously reported that shareholders are expected to provide an investment amount worth approximately 25 million LVL. The state and creditors are prepared to review the recently performed restructuring and payment delaying possibility. UniCredit is prepared to put off the paying of the main amount for two years. This will definitely increase the amount of available funds for LM.

Pone had previously said that it would not be possible to restructure April’s amount. This is why both the amount and interest would need to be paid. It seems likely that the main amount will need to be covered from the state budget. LM will be required to pay the interest rate.

LM is expected to pay 7 780 450 EUR (5 468 130 LVL) to UniCredit this April. 6 128 456 EUR ( 4 307 103 LVL) is the main amount, 1 651 994 EUR (1 161 028 LVL) is the interest rate.

In accordance with regulations regarding the budget classification, the transaction is to be classified as a financial transaction. Based on calculations of the state budget deficit or surplus (national method), it is not to be included in state budget costs.

In accordance with the ESA95 state debt calculation methodology, the payment performed on behalf of the borrower is to be included to state budget expenses in full amount, damaging the general balance of the state budget in the process.

Ref: 102.109.109.7054


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