State-controlled Russian lender VTB Bank has allegedly launched procedures to activate the EUR 60mn loan guarantees extended by the Montenegrin government to aluminium firm KAP, radio station AntenaM informed on July 2, quoting a report of daily Dan.

The state guarantees were extended at the end of 2009 to KAP’s owner – Russian firm CEAC controlled by Oleg Deripaska– and KAP was supposed to begin paying back the EUR 60mn loan to VTB in 2016 in three equal semiannual installments.

According to Dan’s report, based on unnamed sources, the government will delay the payment of this month salaries to the state administration and the public sector because of the guarantees activation.

VTB has already started seizing earlier this year EUR 2mn every month from KAP’s account at its Moscow-based branch, the report said. However, this activity was ceased after KAP entered into provisional insolvency in mid-June - the company stopped selling aluminium to its sole client Glencore, realising the proceedings from the sale will go to its account at VTB and be seized by the bank. As a result, metal worth nearly EUR 2mn has already been held on stock in the factory premises.

The government in Podgorica is now attempting to export the aluminium via state-owned Montenegro Bonus (which took over KAP’s electricity supplies until mid-July) – and thus gain access to the sales revenue on the account of Montenegro Bonus. The report, however, says the success of this plan depends on Glencore, which has signed a deal to purchase the complete annual output of KAP.

Back in 2009, the government agreed to provide KAP with state guarantees worth some EUR 135mn for three loans – at VTB, Deutsche Bank and Hungary’s OTP, and in return acquire half of CEAC’s holdings in the aluminium firm. As a result of the deal, the government and CEAC remained each with a 29.4% stake in KAP.

Last year the guarantees were already activated on the company’s loan with Deutsche Bank and the government had to urgently repay EUR 23.4mn, which resulted in a revision of the state budget. On the other hand, negotiations with OTP are currently underway on delaying the payment of a EUR 49mn loan.