Montenegro's Largest Plant KAP Declared Bankrupt by Court

Kombinat Aluminijuma Podgorica AD, Montenegro’s biggest industrial manufacturer, was declared bankrupt after no one submitted a plan to restructure the smelter before a court-imposed deadline today.

The unprofitable company, once controlled by Oleg Deripaska’s En+ Group, may be offered for sale to cover at least some of KAP’s 459 million euros ($620 million) in liabilities, said court-appointed manager Veselin Perisic.

“We’ll try to keep up production as long as possible to make KAP as attractive as possible to potential buyers,” Perisic said in a phone interview in Podgorica today.

Selling KAP as a whole rather than some of its assets would be the best option, “if creditors agree,” court President Dragan Rakocevic said, according to a report by broadcaster RTCG today. An invitation to bidders may be made in about 20 days, according to the report.

The government borrowed 42.5 million euros in August to repay a state-backed loan to KAP, which employs 1,200 of Montenegro’s 620,000 people. In July, Prime Milo Djukanovic suggested a combination of job cuts and subsidies may keep KAP afloat.

The International Monetary Fund advised in May against the government providing budgetary support for KAP, saying doing so had “failed to put it on a sustainable footing and contributed to misallocation of scarce resources.” Steps should be taken toward KAP’s “orderly liquidation,” it said.

Claims against KAP include 148.4 million euros owed to Montenegro’s Finance Ministry, 43.4 million euros to En+ Group, 50 million euros to En+ Groups’s Central European Aluminum Company, 44.76 million euros to Elektroprivreda Crne Gore AD, and 25.86 million euros to VTB Bank OJSC, according to a list on KAP’s website.

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