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Latvian steelmaker halts production, lays off 300 workers

Xinhua, March 19, 2016 Adjust font size:

After several months of struggling with financial trouble, Latvia's metallurgy flagship KVV Liepajas Metalurgs has halted production and will lay off some 300 workers, the company's Ukrainian owner KVV Group announced on Friday.

About 100 workers will remain to keep the steel plant on "standby mode."

The management said that the decision to suspend production and conserve the KVV Liepajas Metalurgs plant in the southwestern Latvian city of Liepaja has been taken because of an ongoing crisis in the global metal industry and the Latvian government's reluctance to support the debt-ridden enterprise.

The company's shareholders had worked out a restructuring plan for the company's outstanding debts and submitted it to the government, which is expected to announce its verdict on it next week.

Finance Minister Dana Reizniece-Ozola, however, has spoken quite skeptically about the plan. Commenting on Friday's news about the suspension of production and layoffs, she said that the KVV Liepajas Metalurgs shareholders, apparently, had little faith in the business strategy they themselves had devised.

In January, KVV Liepajas Metalurgs failed to meet a 2.7 million euros (3.05 million U.S. dollars) payment it was due to make to the Treasury, which took action, recovering 10 million euros by drawing on collateral.

Liepajas Metalurgs, which is based in the south-western 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. Endit