ECONOMY

Larco survival plan has a chance

Government sources have described as “a positive sign” the troika’s decision to dissociate the restructuring plan for troubled state mining company Larco from that of defense companies Hellenic Defense Systems and the Hellenic Vehicles Industry.

Government officials appear optimistic about the future of Larco, stressing the company’s chances of survival.

The Greek side is awaiting a response from the representatives of the European Central Bank, the European Commission and the International Monetary Fund – known as the troika – to its revised proposal for the restructuring of the mining company. Its sale will be conducted via two parallel tenders through the process of consecutive auctions. This model is seen securing the continuation of the company’s activities, by finding a common investor for the plant at Larymna and the mine at Aghios Ioannis, and for the Kastoria and Evia mines to be sold separately.

The two tenders will proceed in parallel and the winner of each will be asked to propose a better offer for the other, until one winner emerges with the highest bid for both tenders. That way the continued operation of the Larymna plant will be safeguarded, given that it depends on the processing of raw materials from all three mines. Larco’s other assets will be liquidated and the reduction of the company’s staff is very likely, with about 20 percent of its current 900 employees set to depart.

The government’s main argument in its negotiations with the troika for acceptance of the abovementioned model is that no investor is interested in buying the Larymna plant alone.

However, Larco sources say that this model will be hard to implement as it would violate mining legislation and would require a series of legislative interventions. It also puts at risk the interests of the other Larco stakeholders, namely National Bank of Greece and the Public Power Corporation (PPC). The same sources add that Larco’s management is examining a plan for the survival and the sale of the company as a single entity, which would include the reduction of electricity rates as a condition.