Liepājas metalurgs may resume production in February 2018, said potentially insolvent KVV Liepājas metalurgs’ investor, Israel-based businessman Igor Shamis.
“In the next two, three months, we could do all we need to restart the steel melting furnace,” said Shamis.
His partner in the deal is the experienced Swiss steel trader Trasteel Trading Holding. The company’s annual turnover is measured in hundred millions euros. Shamis’ Luxembourg-based company Kalior Invest SA together with Trasteel Trading Holding have founded K-1 Liepaja Metallurgical Plant with capital of EUR 7.5 million to take over Liepājas metalurgs’ property in Latvia.
Because the businessman’s conditions for the deal differ from the ones requested by Liepājas metalurgs’ creditors, the sale of company property has not gone anywhere for several months.
“We disagree on some points. From day one, in May, when we submitted our offer, we were prepared to give EUR 70 million with a ten-year repayment schedule. In exchange, we wanted two years of loan weekends to accommodate investments to help restore production,” said the businessman.
The agreement reached during talks provides for repaying EUR 42 million to creditors within five years. To sign an agreement, however, it is necessary to resolve a certain conflict – the requirement for the investor to pay the first installment to get the rights to work in the factory. Instead, the businessman wants to restore production and only then start repaying the loan.
As reported by the company, the businessman has developed a plan for the restoration of Liepājas metalurgs function, which would involve the investor’s own funds.
“Together with Trasteel Trading Holding we offer a plan that would secure the necessary capital for the steel mill. It is simply not possible to get turnover funds for this company from a bank,” says the investor.
According to current product price trends, if it is possible to reach planned production volumes, revenue from Liepājas metalurgs may reach EUR 900 million.
The businessman hopes that with restored production some of the employees that have left the company will return. If a deficit of employees turns up, the businessman intends to attract workers from abroad. For example, eight people may return from Italy. It is also possible to attract workers from Belarus and Russia. Shamis would like to see head engineer Egils Kupšis made the manager of the company. The businessman believes everything should work out in the end.
“There is no reason to question the plan, because what I’m saying is logical. If we want to restore production, create jobs and ensure the company gets a good place in the economy, we are in the right team,” says the investor.
Shamis’ only concern is that some important piece of machinery may not work, because it was not possible to check everything within the given amount of time. The businessman also denies recently reported information that he has supposedly refused testing machines.
Three years ago, Shamis was one of three contenders for the purchase of Liepājas metalurgs. His offered price – EUR 120 million – was 13 million higher than what was promised by Ukrainian KVV Group, whose proposed payment models were more attractive. Shamis decided to try again because of professional ambitions.
“Personality trait. Determination. Definitely. There are also professional ambitions, because I definitely know a metallurgic company in Liepāja can get a serious place in the world,” said Shamis.
Some clarity as to whether or not the deal with Shamis is given green light will come next week, once the situation has been reviewed by the government.
KVV Liepājas metalurgs was declared insolvent in 2016. (BNN/Ukrainian metal)