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SARAJEVO (Bosnia and Herzegovina), October 9 (SeeNews) – Bosnia's aluminum smelter Aluminij needs urgently to be recapitalised in order to continue operating, according to its general director, Mario Gadzic.
The company's new management, which took over in 2016, was met with huge debt which is putting Aluminij's future into question, Gadzic said in an interview with local news daily Vecernji list published on the company's website on Friday.
"Aluminij's debt was and still is exceptionally high", Gadzic noted. "We owe [power utility] Elektroprivreda HZ HB more than 185 million marka ($111.1 million/94.6 million euro) and this is a debt uncurred by the unfavorable and unwelcome long-term contracts arranged by previous administrations".
He added that the company can not repay its debts on its own.
"In the first six months of 2017, we were favourably impacted by the price of aluminium on the global market and electricity prices, so we achieved a positive EBITDA. However, due to unfavorable climate factors and changes in coal prices, which led to a drastic rise in electricity prices in the third quarter, Aluminij has, unfortunately, been seeing a monthly operating loss of about 3 million marka," Gadzic explained and added the company will likely finish the year in the red.
"At the end of this year accumulated loss will exceed core capital," he said.
Aluminij is now working on initiating a process of recapitalisation and according to Gadzic the government should also get involved in finding a strategic partner.
The government of Bosnia's Federation entity owns 44% of Aluminij, as much is controlled by workers and minority shareholders, while the Croatian government holds a stake of 12%.
Aluminij is based in Mostar, in the Federation of Bosnia and Herzegovina, one of the two autonomous entities that form Bosnia. The other is the Serb Republic.
(1 euro=1.95583 marka)