British Steel: we are in­ter­ested in Liepā­jas met­alurgs’ re­cov­ery, not as­set pur­chase

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The con­sor­tium con­sist­ing of British Steel, Grey­bull Cap­i­tal and Es­to­nian Baltic Metal Hold­ing is in­ter­ested in KVV Liepā­jas met­alurgs’ re­cov­ery, not the pur­chase of its as­sets, says Grey­bull Cap­i­tal part­ner Daniel Gold­stein.

He re­fused to go into de­tail as to why the con­sor­tium ex­ited from last year’s KVV Liepā­jas met­alurgs sale process. He did say that ‘now there may be an op­tion to per­form the com­pany’s pur­chase in a con­struc­tive way’. This is why the con­sor­tium voiced the de­sire to pur­chase all of KVV Liepā­jas met­alurgs’ prop­erty to­gether ear­lier this year. «The pre­vi­ous ap­proach was auc­tion­ing off as­sets. We were not in­ter­ested in such a process. We are in­ter­ested in cre­at­ing a busi­ness. Busi­ness and as­sets are different things. For a busi­ness to form suc­cess­fully, all in­ter­ested sides should ac­tively par­tic­i­pate. This is what we are hop­ing for. As­sets are im­por­tant, but they are not de­ci­sive. If you have as­sets, it does not mean you’ll be suc­cess­ful,» said Gold­stein.

He ad­mits that there isn’t a clear ac­tion plan in re­la­tion to Liepā­jas met­alurgs’ al­ready auc­tioned off as­sets.

Com­ment­ing on the rea­sons why the con­sor­tium did not par­tic­i­pate in auctions, Gold­stein said British Steel is not in­ter­ested in sep­a­rate parts of a busi­ness. «An ex­am­ple – there is an old car at the junk yard and you know how to re­store cars and want to do it, but you try to bar­gain for spark plugs. We can only dis­cuss the en­tire busi­ness and in­volve­ment of all in­ter­ested sides in the process, but not in­ter­ested in buy­ing just the spark plugs. We did try [last sum­mer], but the process in its cur­rent shape is not in­ter­est­ing for us. So we left and wished oth­ers good luck. Now we’re back at the dis­cus­sion ta­ble,» he said.

Ac­cord­ing to the Grey­bull Cap­i­tal’s part­ner, be­cause of Liepā­jas met­alurgs’ fail­ures these past ten years, there is a level of skep­ti­cism about what kind of magic the British con­sor­tium can of­fer to help out where oth­ers failed.

He also men­tioned mul­ti­ple times that the con­sor­tium has very se­ri­ous in­ten­tions when it comes to restora­tion of Liepā­jas met­alurgs’ func­tion­al­ity. «We un­der­stand the met­al­work­ing in­dus­try, we have ex­pe­ri­ence is suc­cess­fully restor­ing com­pa­nies’ func­tion­al­ity. We are here to meet with in­volved sides and move for­ward. It is clear this is an elec­tion year for Latvia, and ev­ery­one is fo­cused on that. We are pre­pared to work with ev­ery­one. I doubt there is any­one who would op­pose restora­tion of this busi­ness,» adds Grey­bull Cap­i­tal part­ner.

Gold­stein also men­tioned that although there are no set terms for talks, the con­sor­tium is pre­pared to wait for tan­gi­ble progress in this process. «It is said that time kills all deals. The longer it takes for a deal to be signed, the more likely the pos­si­bil­ity of it never hap­pen­ing. We are pre­pared to in­vest as much time as it is nec­es­sary if we sense progress and tan­gi­ble re­sults. For ex­am­ple, the pur­chase of British Steel from Tata Steel UK was a very com­pli­cated process due to a num­ber of rea­sons. It took 18 months to com­plete. Such a long time was needed to co­or­di­nate the opin­ions and de­sires of all in­volved sides. We will sense progress. We do not plan to spend 18 months shak­ing hands and re­ceiv­ing pats on our backs,» says Grey­bull Cap­i­tal part­ner.

As­sum­ing the British con­sor­tium man­ages to reach an agree­ment with the state on Liepā­jas met­alurgs’ pur­chase, some im­pres­sive in­vest­ments may be re­al­ized in its di­rec­tion. «We have different busi­ness plans in mind. As bare min­i­mum, a new rolling mill should be in­stalled at the plant to work along­side a modern electric fur­nace and a modern rolling mill to max­i­mize com­pet­i­tive­ness. The min­i­mal in­vest­ment in the for­ma­tion of a new rolling mill is around EUR 52 mil­lion. We are look­ing into other op­tions to en­sure pro­duc­tion with the high­est pos­si­ble added value,» adds Gold­stein.

The British con­sor­tium also has eyes on other as­sets in the re­gion that would help in­crease pro­duc­tion out­put. «For ex­am­ple, it could be premises British Steel or other steel-pro­duc­ing com­pa­nies in Europe could use. Latvia’s ge­o­graph­i­cal lo­ca­tion is very good; we can use it strate­gi­cally. We see very good op­por­tu­ni­ties here,» said Grey­bull Cap­i­tal part­ner.

He is also con­fi­dent that there should be prob­lems with sup­ply of raw ma­te­ri­als or elec­tric­ity price un­til the com­pany is able to function again. «The main source of raw ma­te­ri­als is scrap metal. Cur­rently all scrap met­als in Baltic States are ex­ported to Turkey. If it is eco­nom­i­cally ben­e­fi­cial to carry scrap metal to Turkey, it should also be eco­nom­i­cal to process met­als here. Look­ing at it from this per­spec­tive, we be­lieve there will be no short­age of raw ma­te­ri­als. We also ex­pect no prob­lems with the price of elec­tric­ity. These two are very im­por­tant fac­tors for the plant’s con­tin­ued function. We ex­pect no prob­lems here,» says Gold­stein.

Evija Tri­fanova/LETA

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