Ferro Denies Bankruptcy Rumors

By Christina Tashkevich
Brosse Street Journal
Wednesday, April 21 2004

Citing recent increases in production rates, Zestaponiís Ferro-Alloy has denied media reports that the company faces bankruptcy. The Austrian company DCM DECOmetal International Trading, the factoryís majority shareholder, claims the information spread by Georgian media about the factoryís bankruptcy is false.

"The Austrian company is the guarantee that the factory will not go bankrupt; it brings serious big professionalism and experience," says Ilia Kokaia, the Deputy Head of Ferro Supervisory Board and representative of the Austrian company in Georgia.

The Georgian Supreme Court recently ruled that Ferro should pay a debt of $750,000 to the British company Ronly, which was the factoryís creditor before the Austrian company bought the shares. "When the company came to Georgia, it committed to paying all debts of Ferro and we will do this, but at the same time we think that this court case was the campaign of certain people who wanted to bankrupt Ferro," said Kokaia. He did not specify who he believes is behind this campaign to sink the enterprise, saying only: "There are people who want to get their hands on Ferro."

According to Kokaia, there exists a widely-used scheme of how to bring an enterprise to bankruptcy in Georgia. "Sometimes a head of an enterprise arranges a deal with foreign investors and does not follow its financial obligations. Then of course an enterprise is obliged to pay big fines," says Kokaia.

Committing to abide by its financial obligations and fulfill the court decision, foreign investors at the same time assure that they "will fight without compromises to save every tetri the factory can lose in an unjust way."

In March a delegation from the DCM headquarters was in Georgia to assess the work of the factory and noted progress in the factor's activities. According to the supervisory board, DCMís investments boosted the production in Zestaponi. The monthly production volume of the factory has risen from 3,000 tons to 8,000 since DCM took over. As a result, Ferro, which employs 2,600 people, was able to buy new equipment as well as renovate its facilities. DCM also reports that the factory has been able to pay for its consumed electricity on time in March. The factory pays approximately 2 million lari (about $1 million) per month for electricity.

DCM, founded in 1846, has metallurgy operations in 41 countries mining manganese, chromium, mineral sands and steel-making raw materials.

(Christine Taskevich, a 2002 graduate of CSJMM, is a reporter for The Messenger in Tbilisi. Their stories can be accessed at www.messenger.com.ge)

Copyright © 2004, Brosse Street Journal.