Montenegro’s only aluminium plant and biggest exporter declares bankruptcy

A Montenegrin court declared the company bankrupt and has ordered its sale. The proceeds will be used to repay the firm’s $516 million debt – an amount which, according to Reuters, equals 10% of the country’s economic output.

KAP employs 700 people, according to a local news site (Serbian language). Employees believe an investor will buy the company and save their jobs. A union president told reporters that the bankruptcy would not affect employees.

According to one news report, Rusal- the world’s largest aluminium company – was interested in purchasing KAP in 2005. Instead, Salomon Enterprises – a company by the same owner as Rusal – bought majority shares. The state took back half of these shares several years later in a debt equity swap.

Montenegro has been facing a lot of international pressure – especially from the European Union – to let the heavily-subsidized firm die. Earlier this year, the International Monteary Fund urged lawmakers to shut the debt-ridden plant as it was soaking up €3 million in state subsidies each month.