Lithuania's Ukio Bankas seeks buyer for EUR 78.4mn claim against Bosnian alumina producer Birac

By bne IntelliNews August 28, 2014

Lithuanian lender Ukio Bankas has published a tender to sell its EUR 78.4mn claims against Vilnius-based Birac Europe, which controls the main assets and production units of Bosnian alumina plant Birac, news service reported on Aug 28. 

The news agency says that according to unofficial information, a group of Bosnian investors in among the most interested in the purchase, and has already submitted a proposal to the Lithuanian lender. The Bosnian businessmen reportedly offer to buy the claim for an amount that is less than 10% its size.

Ukio's tender invitation for Birac

Ukio Bankas, which took over Birac Europe in the beginning of 2014, is saying in a tender invitation that its EUR 78.4mn creditor claim is secured by the shares of Birac Europe and its subsidiaries in Bosnia, as well as by enterprise mortgage, current and non-current assets.

It specifies that Birac Europe controls one of the largest business groups in Bosnia, active in mining and aluminium raw material production, which is also among the top alumina producers in Central and Eastern Europe. The Bosnian group also produces hydrate and zeolite. It consists of the main production company - Alumina, and bauxite producer RB Srebrenica. Its subsidiaries are maintenance company Mechanika and Alumina's production unit Alusil.

According to Ukio Bankas, the group's annual production potential is 600,000 tonnes of alumina and zeolite. Yet, it currently uses only about 50% to 60% of its capacities. The tender invitation also says that in 2013 the sales income of the Bosnian group was EUR 84.4mn.

The Lithuanian lender suggests that the buyer of its creditor claims could use them in two ways - they could capitalise the debts via acquiring the control over the group, or they can recover the debt through the sale of the pledged assets.

Ukio Bankas expects proposals from interested parties to acquire its creditor claims by Sept 19, 2014.

Who owns Birac's assets

Bosnian media have been covering the dispute between official Lithuania and the government of Bosnia's Serb Republic over the ownership of Zvornik-based Birac's assets ever since the spring of last year when both Birac and its former owner Ukio Bankas went bankrupt.

Birac entered bankruptcy in April 2013 – shortly after the police and tax inspectors raided its premises over suspicions into illegal transactions between connected legal entities. Prior to the bankruptcy Ukio Bankas, which itself went bankrupt in Feb 2013, owned 56.8% in the alumina producer following a 2001 privatisation deal.

The grounds for the ownership saga were set back in 2012 when Birac's Lithuanian management decided to set up the Birac Europe firm in Lithuania and to transfer it the ownership over Birac's two daughter companies - Alumina and Mehanika. Soon after, the assets of Alumina and Mehanika were used as collateral for the EUR 78.4mn loan, which now Ukio Bankas claims.

However, when the Serb Republic opened bankruptcy at Birac last year, the bankruptcy manager started a procedure for changing the ownership and returning Alumina and Mehanika directly under the wing of Zvornik-based Birac. As a result, in July 2013 Birac was again registered as the owner of the two companies.

Nevertheless, the Lithuanian side, i.e. Birac Europe, considered this transfer illegal and has asked the court in Banja Luka to annul the decision and restore Birac Europe back as their owner.

In order to find a way out of the problem, the Serb Republic and the bankruptcy management of Ukio Bankas agreed in December 2013 to form a joint working group that will try to find out how to shorten the court trial and wrap up the bankruptcy proceedings at Birac. The EUR 78.4mn claim makes bankrupt Birac one of the biggest debtors of Ukio Bankas.

In May 2014, local media reported that Ukio Bankas, in its role of Birac Europe's manager, asked Banja Luka's commercial court to annul the previous decision, under which Alumina and Mehanika were taken from Birac Europe and transferred back to Zvornik-based Birac.

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