Off the wire
• Inter-clan fighting kills at least 9 in central Somalia: locals  • LME base metals mostly decrease on Wednesday  • British FTSE 100 decreases 0.03 pct on Wednesday  • 1st LD-Writethru: Taiwan parties, groups rally to urge adherence to 1992 Consensus  • Large-scale HIV vaccine trial to begin in South Africa: U.S. agency  • Huawei partners with Kenyan firm to enhance customer services  • German astronaut Alexander Gerst to embark on second space mission  • Equity turnover at Nairobi bourse doubles as stock prices rise  • U.S. stocks turn higher ahead of Fed minutes  • Belt and Road Initiative a game changer in Asia-Pacific: UNESCAP  
You are here: 　 Home

Latvia faces int'l court action over troubled steel company

Xinhua, May 19, 2016 Adjust font size:

Latvia faces an international court action over its financially troubled KVV Liepajas Metalurgs steel company whose shareholders have failed to reach an agreement with the government on a mutually acceptable solution to the situation.

According to media reports, the struggling company's Ukrainian owners are going to lodge a 50- million-euro (56.37 million U.S. dollar) lawsuit with a London court of arbitration, on the grounds the Latvian side did not provide them with full information when they were buying the insolvent metallurgical company.

Latvian Economics Minister Arvils Aseradens said earlier this week that KVV Liepajas Metalurgs was showing signs of insolvency again. The steelworks company, based in the southwestern Latvian port city of Liepaja, has ceased production and its owners have missed a number of payments, including to the Latvian government, as well as gas and electricity suppliers.

Aseradens confirmed to reporters on Wednesday that Ukraine's KVV Group had warned of an international lawsuit against Latvia. "We need to exert caution," the economics minister said.

Meanwhile, Latvian President Raimonds Vejonis accused KVV of blackmailing the government and said Latvia had been meeting all its contractual obligations with the Ukrainians.

The Latvian Privatization Agency, which has been tasked with recovering the government loan granted to KVV, is expected to come up with its proposals next week.

After struggling with financial troubles for months, KVV Liepajas Metalurgs halted production in March 2016 and laid off some 300 workers. About 100 workers remain to keep the steel plant on a "standby mode."

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

In January, KVV Liepajas Metalurgs failed to meet a 2.7-million-euro payment it was due to make to the Treasury, which took action, recovering 10 million euros by drawing on collateral.

Liepajas Metalurgs 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 instalments 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