On January 12, “Liepājas Metalurgs” insolvency administrator Haralds Velmers handed over the symbolic keys of the company to the newly-established company's “KVV Liepājas Metalurgs” member of the board Igor Kovalenko. Prudentia has provided advisory services to “Liepājas Metalurgs” insolvency administrator Haralds Velmers in organizing a successful selling process of the steel mill’s assets.
“Today we can safely say that the process of selling company's steel mill’s assets is successfully finished. With a deal value of 107 million EUR, this is the largest M&A deal in Latvia in 2014. Undoubtedly it was a complicated process in a complicated industry, however we managed to find a serious investor who acknowledges the potential of the company and envisions further future development of the company. It is a substantial gain for the Latvian economy,” CEO of Prudentia Kārlis Krastiņš commented.
In the end of March 2014, Prudentia was selected as a consultant for the organization of an international investor attraction process by Haralds Velmers. Prudentia was chosen in a tender organized by the insolvency administrator of the steel mill “Liepājas Metalurgs” out of six consultants, with whom negotiations took place. The main criteria of the tender were: previous experience, the consulting team, consultant’s developed sales plan and offered timetable. An important factor was that Prudentia had been a consultant of “Liepājas Metalurgs” creditors club prior the insolvency of the company “Liepājas Metalurgs”, Velmers explained back in March.
Prudentia’s main tasks included a world-wide selection of the potential investors and buyers of the steel mill in a limited time frame, organizing of the information provision to the potential buyers, assessment of submitted non-binding and binding offers, as well as facilitating the negotiations stage with the goal to improve the value of the receivable offers.
In total, six binding offers were received from which two of the applicants were allowed to participate in the final negotiation stage. After receiving improved offers from both investors, the decision to sell the steel mill to Ukrainian investors “KVV Group” was made. An agreement to sell the company was signed in early October.
The chosen investor offered a price of 107 million EUR for the steel mill, where on the payment will be made in a combination of an up-front payment (17 MEUR) and the residual amount on a long-term (10 years) deferred payment basis. In addition, “KVV Group” will invest around 30 million EUR in the current assets of the company in order to resume operational activity of the company in early 2015. The investor plans to produce construction rebars, with the long-term goal to diversify the product portfolio of the company.