Slovakia's largest industrial company steel-maker, VSŽ a.s., Košice, announced on April 6 that it will not pay off yields from bonds due on April 4. Citing the company's on-going restructuring process, VSŽ officials said they will pay off the outstanding yield as soon as their financial situation improves, the announcement read.
The delayed yields are from a 700 million crown five-year bond issue of October 4, 1995, which matures on October 4, 2000. The issue carries a coupon payable twice a year - on April 4 and October 4. As the coupon pays the discount rate of the central bank (now at 8.8%) plus 3.5%, on April 4 the VSŽ should have redeemed 43 million crowns in total.
In early November 1998, VSŽ representatives admitted that they expected to end the year with a loss because of negative developments in the global metallurgy industry. They also announced plans to reduce their labor force, and to give up their stakes in financial institutions. The company was also facing problems paying off a syndicated loan of $35 million arranged by Merrill Lynch.
In late March, VSŽ representatives signed a "stand-still" agreement between VSŽ and the Bank Coordinating Commission.). Validity of the agreement is conditioned by approval of the main creditor - VÚB (Všeobecná Úverová Banka). The agreement includes provision of new financial sources for VSŽ in the amount of $50 million.
