Ljubljana, 14 June (STA) - Builder SCT withdrew its proposal for debt restructuring on Tuesday, in effect initiating receivership proceedings at the once mighty construction giant.
The announcement came as the Ljubljana District Court was about to start deciding on an appeal against the ongoing restructuring filed by five SCT employees and former administrator Majda Santl, with 14 June having been set as the deadline for SCT to prove it has paid out outstanding wages and severance.
The decision to give up on debt restructuring was reached at Monday's session of the SCT management board and will be followed up within eight days - possibility as early as Wednesday though - by the launch of receivership proceedings by the Ljubljana court.
The management of SCT, whose debt stands at an estimated EUR 120m or even EUR 450m when taking into account all bank guarantees, told the creditors' committee on Monday that the company would not file a supplemented debt restructuring plan.
The idea had been to find a strategic partner which would provide the funds needed to pay out wages. The last candidate was Cestno podjetje Ljubljana, which was to secure EUR 30m, but it backed out in the face of demands by banks that it take over EUR 110m in guarantees.
The turn of events meant that receivership was all but a certainty for the biggest Slovenian construction company, which in its heyday was a giant even by European standards and according to some estimates provided jobs for up to 100,000 people in the former Yugoslavia.
SCT has shrunk substantially since, with crisis manager Dusan Meh, appointed just over a month ago, estimating that 760 people will lose their jobs as a result of receivership.
The SCT trade union, which says that these workers have not been paid since January or even last December, has been pointing out that workers can only expect to receive outstanding wages for three months, while three more wages will be relegated to the status of ordinary claims.
The receivership will be managed by SCT's new administrator Benigar Tosic, who expects a protracted procedure. "Surely it will take a long time, given the size of the bankruptcy assets, the large number of creditors and conflicts," he said.
Concern over the complexity of the proceedings was expressed on Monday by motorway company DARS, which told the STA it was not sure how builders which were involved as subcontractors in SCT's ongoing contracts would meet their contractual obligations and take over the guarantees provided by SCT.
The trade union of construction workers with the ZSSS trade unions confederation on the other hand noted that the attempts to provide a capital injection and take over SCT had been just a way to delay matters.
The union believes the management did all it could to deplete SCT's assets and thereby undermine the claims of creditors.
Economist Rasto Ovin commented on SCT's fate by putting it forward as an example of Slovenia's transition strategy and a warning to proponents of the concept of national interest.
While "especially after independence, these companies - the champions from the Yugoslav time - prevented a major drop in GDP by refocusing away from the markets of the former Yugoslavia and the easern bloc", a different conclusion in regard to know-how and capacities.
Claiming that Slovenia did not have sufficient own know-how and capital, Ovin noted that "false belief in our own capabilities kept alive failed companies that would not have been able to exist, let alone prosper without substantial backing from politics".
"The result are roads which are among the most expensive around and which were built at a pace permitted by domestic capabilities. What will follow now is a blow to the banking system and everyone else connected to this company."