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Is Aluminij d.d. Mostar about to go bankrupt?

26 May 2015
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May 2015 didn't have a good start in the Mostar aluminium factory. Earlier this month, the company's business accounts ended up blocked. Poor condition of the company is confirmed in the auditor's report by auditing company KPMG, and small shareholders are dissatisfied with the work of the managing board.

According to the auditor's report on the annual financial statements for the year 2013 and 2014, submitted by KPMG, Aluminij d.d. recorded losses and has no resources to settle obligations to its business partners. The report stated that the factory made a loss of 75 million KM (approximately 38.35 million euros), and that 2014 ended with debt of 213.8 million KM (approximately 109 million euros). More than 50% of the debt relates to the debt to Elektroprivreda HZ HB Mostar, and other debt for loans and accounts payable.

This year came additional 111 million KM (approximately 56.75 million euros) debt to vendors and banks expired, for which the company simply doesn't have enough resources to pay from. The main part of the debt, 60 million (approximately 30.68 million euros) is for the unpaid electricity bills and the rest for the bank loans. Furthermore, just to maintain the current capacity, the company needs 22 million KM. It is estimated that if the factory does not find a way to agree with creditors, it will go bankrupt.

The report also states that the Aluminij d.d. Was selling its products at a price that did not cover even the cost of production.

However, the first quarter brought a ray of hope in Aluminij d.d. because the company gained profit after a long time, amounting to about EUR 2.5 million, but it could also be a consequence of the current situation on the market - the high cost of aluminum (which is in meanwhile significantly corrected) and a favorable US dollar exchange rate.

Nikica Ljubic, the managing director of Aluminij d.d. said that the allegations about Aluminij d.d. going bankrupt "do not correspond to the truth". He added that production capacity is reduced due to lack of funds for maintenance of the manufacturing halls. In the last three years 55 electrolytic cells were turned off – which means 20% of production capacity.

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