December 3, 2013 / 5:43 PM / 4 years ago

Deripaska's CEAC sues Montenegro over aluminum plant bankruptcy

ВРЕМЯ ЧТЕНИЯ 3 МИНУТ

* Russian billionaire Deripaska's company sues for 100 mln euros

* Montenegro government denies any wrongdoing

PODGORICA, Dec 3 (Reuters) - Russian billionaire Oleg Deripaska's Central European Aluminum Company (CEAC) is suing Montenegro for 100 million euros ($140 million) over the failure of its aluminum plant there.

A statement issued in Cyprus, where the Russian company has its headquarters, CEAC said the case will heard in Vienna.

The statement said Montenegro violated a 2010 settlement agreement, leading to the plant going bankrupt.

In a separate statement, Montenegro's government denied any wrongdoing.

Deripaska's company in 2005 bought a 58.7 percent stake in Kombinat Aluminijuma Podgorica (KAP), which in its heyday in the late 1970s had employed 5,000 people.

In a debt for equity deal, the Balkan country's government took back half of that stake in 2009 and the arrangement was sealed in 2010.

Deripaska is also co-owner and chief executive of Rusal , the world's biggest aluminium producer, which is feeling the effects of a weak aluminium price and the cost of maintaining net debt of around $10 billion.

Last year KAP accounted for 30 percent of Montenegro's exports, down from 40 percent in 2011, but its business and about 1,000 jobs were kept afloat by big state subsidies and loans that it could not repay.

As Montenegro approached membership of the European Union, where such direct subsidies are not allowed, the government had to address the issue of KAP and its debt, which equalled 10 percent of the country's output.

In July, it first launched partial bankruptcy proceedings over KAP's 24-million euro debt to Deutsche Bank. In early October, a court declared bankruptcy over 380 million euro debt to creditors.

In a statement, Montenegro's government denied responsibility for damages to CEAC. "The government ... acted in line with laws, it did not make a move which was not in accord with domestic and international legal provisions concerning KAP," it said.

The government is KAP's biggest creditor, accounting for 148 million euros of its debt. On top of that, it issued guarantees for a 132 million euro loan and now needs to make additional borrowings to secure funds for the payment. (Reporting by Petar Komnenic; Writing by Ivana Sekularac; Editing by Louise Ireland and Anthony Barker)

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