Troubled Slovak steel maker VSŽ has reached a standstill agreement with its creditor banks, which also granted it new loans of $50 million, putting it on the road to recovery, VSŽ said on March 26.
VSŽ, which accounts for some seven percent of Slovakia's gross domestic product, ran into trouble after it failed to meet a $35 million payment on a syndicated loan in October.
"It is the first clear sign of stabilisation of the financial situation... It means that we have agreed with bank representatives that the company does not have to pay its debts while the standstill agreement is in effect, and the banks have agreed to grant VSŽ a loan of $50 million," a statement from the company quoted VSŽ President Gabriel Eichler as saying.
It added that the standstill was signed for two months with the possibility to be extended twice by a month. VSŽ would pay no interest on the new loan in this period. The agreement still needed to be approved by one Slovak state-owned bank, the statement said.
Eichler, elected after the company's problems last year, has said VSŽ will now focus on shedding its non-steel related assets and collecting overdue claims. VSŽ recently received an overdue $15 million from its former exclusive foreign distributor Barcos, the statement said.
The company has said it was holding talks with several foreign steel companies.
