Decider for Huta Katowice
Huta Katowice can now only hope that the banks who have lent it more than PLN400m will give it a chance to collect its own outstanding invoices before calling in the loan. If this happens there could be still a chance to restructure and find an investor. If not, that could be the end of the road.
In 1998 a consortium of banks made up of Bank Przemysłowo-Handlowy PBK, Kredyt Bank, Pekao SA, Bank Śląski and Bank Handlowy lent the steel works PLN400m. Now there is no money to repay the debt.
It would seem that the steelworks wants until July to repay the debt. The banks might consider this a slightly less dangerous risk if there were an investor. Today is the last day for investors to appear. The irony is that investors would only take the risk if they knew the banks would hold off and that other creditors would accept shares.
Converting debt into shares is easy when the creditor is a state owned company as in the case of rail operator PKP, electricity supplier Będziński Zakład Elektroenergetyczny and coal supplier Węglozbyt. Others are harder to convince.
The steel works now has a shortfall of PLN150m for materials each month and suppliers are unwilling to give credit. This is costing Huta Katowice heavily.
If the banks do not give more time then this would be the same as the bankruptcy of Huta Katowice. However this would not help them get their money back and it could be in their interests to wait as the mill has orders. The problem returns to that of paying for raw materials. Turning off one of the furnaces also will not help as this will also be a costly process. One hope is that the state will not permit the loss of steel making sector. Even in the USA nine steel works have filed for bankruptcy protection proceedings.