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6 I Companies & Markets bne July 2024
Liberty Ostrava entered insolvency proceedings last week. / bne IntelliNews
The company said the reorganisation would "provide the time and protection to undertake the sales process and further restructuring measures to stem losses".
The company blamed market conditions – namely global oversupply and historically high imports into Europe from countries which face much lower regulatory and decarboni- sation costs. Soaring energy and coal prices and falling steel demand and prices following Russia’s invasion of Ukraine have hurt a sector already struggling to adapt to European Union environmental rules that reduced competitiveness compared to Asian rivals.
It also pointed to the Czech goverment's failure to transfer emission permits to Liberty Ostrava. Relations between the British-based group and the Czech government have all but broken down, with Czech ministers accusing the indebted group of failing to communicate and of moving money out of the company to other operations.
The government has refused to run to the aid of Liberty Ostrava and now appears determined to transfer its operations to
a domestic investor.
SZ’s commentator Petr Holub and editor-on-chief of Reporter magazine, pointed out that for a potential takeover, the insolvency court would first have to turn down Liberty Steel's proposed reorganisation, which could take “weeks or months”.
Jurecka made his comments after a meeting with Liberty Ostrava’s labour unions and representatives of the labour office on Tuesday, June 18, where state aid to Liberty Ostrava’s employees was discussed. “If the plant is to re-start again then we need to keep the people, and not have them quit
en masse,” Jurecka told the media.
“We view positively that strategic investors are appearing.
I firmly believe that we will maintain as many workplaces as possible,” head of the labour union KOVO Roman Druco was quoted as saying by Czech Television (CT), which also cited the general director of the country’s Labour Office, Daniel Kristof, as saying that 437 employees had filed a request for salary remuneration as of Monday. Under Czech law the state can cover missed salary payments in the event of company insolvency.
Kristof said that his office could start with the salary payments next week and estimated the costs to be around CZK1bn (€40mn). Before entering insolvency, Liberty Ostrava had around 5,000 employees, according to the reports in the Czech public media. Unions say up to 30,000 jobs in total
are dependent on the plant in what is one of Czechia’s poorest regions.
Rail Baltica could require an extra €19bn in funding, say audit offices
Linas Jegelevicius in Vilnius
The Baltic states’ premier infrastructure project, Rail Baltica, is at risk because its estimated cost has soared 400% over the last seven years, potentially leading to a budget shortfall of €10bn-19 bn, according to a joint report by the state audit offices of Estonia, Latvia and Lithuania, ERR.ee, the website of Estonia’s national broadcaster ERR, reported on June 12.
The state audit offices of Estonia, Latvia and Lithuania have estimated that up to an additional €19 billion is needed to complete the Rail Baltica project in full. Taking into account the latest project budgets and already allocated funds, Estonia requires an additional €2.7 billion, Latvia needs €7.6 billion and Lithuania requires €8.7 billion to finish the project.
www.bne.eu
To cope with the increased budget and the strict deadline
of 2030 for the railway's completion, the governments of Estonia, Latvia and Lithuania are preparing to scale back the work to be completed by 2030, focusing on constructing the main railway line. This reduction in the project's scope means that local stops will be built later or with minimal functionality, and some sections of the railway will have only a single track instead of two.
Reducing the originally planned scope of the project is expected to nearly halve the anticipated budget shortfall for the three countries by 2030. Under the first-phase scenario, the estimated shortfall for the three countries combined would be