Turkey's Sahinler interested in cooperation with Montenegrin aluminium firm KAP

Turkish metal products manufacturer Sahinler is interested in buying out the complete annual production of Montenegro's bankrupt aluminium firm KAP and could become a partner of Niksic-based Uniprom – the sole bidder for KAP's assets, Portalanalitika.me informed on March 28, quoting a report of broadcaster TVCG.

The statement was made by Sahinler's executive manager Osman Sahin who held talks with Montenegrin economy minister Vladimir Kavaric together with Uniprom's owner Veselin Pejovic. Sahin said that in several years KAP could employ as many as 10,000 workers.

He explained his company has two aluminium plants in Istanbul and Ankara and owns a port in the city of Bursa, as well as ships. The company has an annual turnover of more than EUR 1bn and a 40-year experience in the production of secondary aluminium.

"We import 80% of the raw materials and will purchase the complete annual production of KAP. We are ready to enter into partnership with Uniprom," Sahin said, adding KAP would be able to employ 3,000 workers in the beginning but in a few years could see this number growing to 10,000.

Pejovic's Uniprom filed the sole bid in the second tender for the sale of KAP's assets in February and KAP's bankruptcy receiver approved the bid worth EUR 28mn - but the completion of the transaction now awaits the approval of the bankruptcy judge and the parliament.

Uniprom also pledges to invest EUR 76mn in raising KAP's production capacities to 120,000 tonnes of primary and 30,000 tonnes of secondary metal products by 2018. The investor, however, asked for written statements from energy producer EPCG and power grid operator CGES that in the new contract for KAP's electricity supply the price per MWh, including distribution costs, will not go above EUR 38. Only under this condition Uniprom is ready to continue the production of primary aluminium and engage at least 300 workers in it.

Still, the electricity price is not the only bumpy issue on the road to the deal. The whole sales process is also at risk by the country's law on protecting the state interest in the mining and metals industry (the law on aluminium firm KAP). This law says that KAP's assets should be sold to a new owner all together, while in the second tender only part of the assets would be sold to Uniprom. Another part of KAP's assets – the red mud basins and other property, were already sold earlier this year to Ukrainian-owned firm Politropus Politropus Alternative within the first tender for KAP.

The controversial law on KAP also gives the final say on the fate of the company to the parliament and not to the court (as is typical when a company is in bankruptcy). This law was ratified by the opposition and the junior coalition partner SDP - but against the will of the governing DPS. DPS is challenging the legality of the law at the constitutional court, claiming the document is in breach with the existing bankruptcy rules. The whole quarrel would certainly delay the potential investment in KAP.

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