Celje/Velenje, 01 September (STA) - Vegrad, the insolvent Velenje-based builder, will go into debt restructuring after the Celje District Court confirmed Wednesday the management's proposal to try and salvage the firm by tackling the EUR 240.7m debt burden.
The procedure will be managed by a court-appointed administrator and a panel of creditors which features two banks, a leasing firm, the Tax Administration and several Vegrad suppliers.
Vegrad's debt includes EUR 10.9m-worth of leasing contracts and EUR 2.9m in unpaid wages, which will be paid in full, as well as secured bank claims worth EUR 31.9m. EUR 9.1m in non-secured claims will be subject to negotiations with the creditors.
For the remaining EUR 185.7m, Vegrad has offered to repay the creditors less than a fifth of the total sum within four years, according to the court filing.
The restructuring plan also involves disposal of assets worth EUR 15.1m and a cut in the workforce from 1,125 to about 485.
Debt restructuring is the latest chapter in a long downfall of one of the biggest construction companies in Slovenia, which started when housing prices, to which Vegrad was heavily exposed, started to drop in late 2008, coinciding with the start of the financial crisis.
The company has been in turmoil since and the embattled boss, Hilda Tovsak, stepped down on Monday amidst mounting calls to depart.
However, she has been succeeded by a hand-picked successor, Boris Medved, with the backing of Vegrad's majority shareholder, Vegrad nalozbe, in which she has a significant holding.
Medved's appointment was balanced with procurator Sandi Knez, who was named at the insistence of Vegrad's second largest shareholder, the state-owned PDP.