Latvian metallurgy flagship suspends production amid shrinking market

Latvia's metallurgy flagship, KVV Liepajas Metalurgs, suspended production as of Jan. 28, the company's board member Igor Talanov informed on Monday.

The Ukrainian-owned company recently failed to meet a 2.7- million-euro (2.9 million U.S. dollars) payment it was due to make to the Treasury, which took action, recovering 10 million euros by drawing on collateral.

Talanov maintained, however, that the decision to temporarily stop production was taken because of adverse market trends.

"We have planned this break in February in order to cut possible financial losses which could be brought about by a slump in the market of finished metal products. The market shrank by 10 percent last week, and by halting production, we might avoid losing some 600,000 euros in February," Talanov explained.

KVV Liepajas Metalurgs's management might consider resuming operations already in mid-February, the board member said.

In January, KVV Liepajas Metalurgs asked the Treasury to postpone the 2.7-million-euro payment the company was supposed to make in late 2015.

Liepajas Metalurgs, which is based in the Latvian port city of Liepaja, was acquired by Ukraine's KVV Group in October 2014. Under the agreement, the Ukrainian company is expected to pay 107 million euros for the Latvian metal working company in several installments over the next 10 years.

Liepajas Metalurgs was declared insolvent on Nov. 12, 2013 after the company ran into financial trouble and had to cease production in spring 2013 due to a shortage of working capital. (1 euro = 1.09 U.S. dollars) Endite