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Chr. Staikouras: The goal is to attract reliable investors who will ensure the viability of LARCO

In order for LARCO to be able to become internationally competitive and to be able to add value to the country, an investor must be found who will modernize it, noted the Minister of Finance Christos Staikouras, answering a topical question of the Greek Solution MP Vassilis Viliardos for the special liquidation of the company.

According to the Minister of Finance, the Government’s goal is to attract reliable investors who will ensure the viability of LARCO’s mining and metallurgical activity, and to cover all employees, adding that the government, through the competent Ministry of Labor, is already looking for solutions. for all employees.

“Today, thanks to the actions of the Government, LARCO remains open and is in search of a strategic investor, in order to shape the conditions for the continuation of its activity”, said Mr. Staikouras.

Concluding, the Minister of Finance noted that “those who today make easy promises, failed to find a solution when they could, inflating the problem” to add that
“There is no room for wasting another time. It is time for decisions, actions, responsibility.”

The answer of Christos Staikouras in detail.

Dear Mrs. Colleague,

The Government of the New Democracy received and was called upon to manage a financially unsustainable situation, a result of the accumulation of negative results, poor financial management for many years and inaction of the previous Government.

Specifically:

1st The Company’s cash and cash equivalents in 2019 were zero.

2nd Due to accumulated losses and successive loss-making years from the past, the negative net position of the Company increased from -160 million euros at the beginning of 2015, to -407 million euros at the end of 2019.

That is, the Company operated – for years – with negative working capital, based on the late repayment of its liabilities.

3rd In the 5 years 2015-2019, debts amounting to approximately 260 million euros were accumulated.

The losses of the Company amounted to 99 million euros in 2019.

In previous years, the Company’s results were -30 million euros in 2015, -68 million euros in 2016, -6 million euros in 2017 and -57 million euros in 2018.

4ον. LARCO’s overdue debts to suppliers, contractors, banks, insurance funds and others amounted to € 500 million.

The biggest debt concerns PPC.

This debt from 144 million euros in 2012, amounted to 242 million euros in 2016, and jumped to 351 million euros in early 2020.

The debt was increasing – every month – by 5-5.5 million euros.

That is why PPC sent successive out-of-court settlements to the Company, with dates of January 21, 2020 and January 29, 2020, planning a power outage of the Company on February 17, 2020. That is, in essence, closure of the Company!

5ον. Greece, on January 21, 2022, was convicted by the European Court of Justice for non-compliance with the decisions on illegal state aid to LARCO, amounting to 136 million euros, plus interest (currently 170 million euros).

A fine of 4.4 million euros was imposed on the Greek State per half-year delay from 2017 until the execution of the decision, and a lump sum of 5.5 million euros.

6th According to the Company, the last published balance sheet was in 2014.

For the subsequent years, no financial statements had been prepared, which have been approved at least by the Board of Directors.

7ον. The Company, over time, showed a serious deficit in compliance with the environmental conditions of the factory, with the risk of revoking its Operating License, from 2016.

8ον. The Company has outdated equipment that makes LARCO non-competitive, regardless of international nickel prices.

Indicatively, I mention, according to the image we have from the Company, that the basic equipment of LARCO is from the 1970s, with the most recent furnace being built in 1979, and since then no substantial investment has been made.

Funds are therefore needed to modernize nickel mining and production and environmental compliance.

Κε. Colleague,

We received this image of the Company.

This is the reality, not the imaginary, imaginary world that many irresponsibly invoke.

With the start of the Government consolidation plan, ie the law that was passed for the establishment of the Special Management, in March 2020, immediate actions were taken to rationalize the costs, both in business and financial level, with the contribution of the employees, since the Company it was impossible for it to continue operating at a loss of € 99 million each year.

The installation of Special Management was chosen by the Government as the only solution that could keep the Company open, without finding employees on the street.

And this goal, to date, has been achieved.

The Company, in the three years 2020-2022, repaid all the obligations formed during this period to employees, PPC, contractors and suppliers, without stopping a single day of nickel production, and without having dismissed an employee.

This is also due to the state funding from the current Government, for the first time in recent years, amounting to 52 million euros.
Proof that we are interested in the Company and its employees.

DYTEROLOGY

Dear Mrs. Colleague,

The net worth of the Company was negative 407 million euros, and if state aid is included in it, then the book value is negative around 600 million euros.

Regarding the commercial value of the Company, in order to determine it, one must examine the total cash flows that the Company will achieve in the future.

In order for the Company to have positive cash flows, the necessary investments must be made, so that its productive base becomes competitive, and it sells at prices above cost, in order to make a profit, something that does not happen today.

In addition, as the two bidding procedures under the HRDF and the Special Administrator are ongoing, it would not be possible to disclose estimated assets.

Also, precisely because the tenders are in progress, the Greek State is called upon to settle a number of important operational issues of the Company (indicative licensing issues, environmental issues, etc.), which potentially enhance the value of the assets.

In addition, with the Government’s consolidation plan, the Company is expected to continue its operation.

If the Company finds an investor who will make the necessary investments, then it will potentially be a very important asset for the production of added value.

It is also a fact that the values ​​of nickel are rising worldwide, but the prices of all the raw materials that the Company needs for production are also rising, ie electricity, oil, coal, etc.

The rise in prices is a result of rising demand, both for the electronics industry and for many other industries and applications.

The need for global nickel industry is well known.

In any case, in order for the Company to be able to become internationally competitive and to be able to give added value to the country, an investor must be found who will modernize it.

Where are we today?

Today we are at the stage of binding offers.

The Government’s goal is to attract reliable investors who will ensure the viability of LARCO’s mining and metallurgical activity, and to cover all employees.

In particular, in the next few hours, the final draft contracts for the two independent parallel international open tenders conducted by the HRDH for the assets of the Greek State and the Special Management of LARCO will be submitted to the potential investors, in order to submit their binding bids within 30 days.

At the same time, a number of outstanding issues are being settled by the competent Ministries in matters of environmental licensing, operating licenses, arbitrary buildings, etc., in order not to be an obstacle to achieving the best price in both tenders and at the same time to create the conditions for the new investor to make the necessary investments to modernize mining and production, in order for the Company to enter a growth trajectory.

Also, the Government, through the competent Ministry of Labor, seeks the best solutions for all employees.

Today, thanks to the actions of the Government, LARCO remains open and is in search of a strategic investor, in order to shape the conditions for the continuation of its activity.

LARCO’s admittedly difficult situation requires seriousness, honesty and cross-party consensus for the next day.

We all have a debt and a responsibility to the employees and all the Greek taxpayers to tell the truth.

Those who make easy promises today have failed to find a solution when they could, exacerbating the problem.

There is no room for wasting another year.

It is the time of decisions, actions, responsibility!

Source: Capital

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