Russian ownership (2005–2013)
On 1 December 2005, KAP was privatized, with 65.4394% of shares being sold to Salomon Enterprises Limited (later renamed CEAC – Central European Aluminum Company), a company based in Cyprus, for €48.5 million and obligations to invest over €50 million in its modernization and environmental upgrade. CEAC is fully owned by En+ Group. The negotiations on the sale were conducted directly between Oleg Deripaska and the then Prime Minister of Montenegro, Milo Đukanović.[3]
In May 2006 CEAC said that "various breaches of representations and warranties" of the deal were discovered by accountants Deloitte, including KAP having "hidden" debts and obligations towards the state totalling tens of millions of euros. In addition, the government-certified 2004 accounts were deemed inaccurate when it came to working capital and other assets. "It became evident to CEAC that KAP's initial financial situation had been misrepresented," the company claimed.[4]
As of 2008, the KAP has struggled to survive the impact of ongoing economic crisis. The low trading price of aluminium, and expensive production inputs, primarily the electricity and alumina production, have resulted in KAP generating daily losses of up to €200,000. The company has been unable to survive ever since without the constant Government subsidies, primarily in writing off the debt for electricity.
In June 2009, the financial situation at the company had not improved, leaving KAP in danger of being closed by CEAC. The government, not wanting to see its largest company being shut down, agreed to guarantee a €45 million loan.[5] In exchange, the government would receive half of the stakes owned by CEAC, leaving CEAC with a stake of 29.3%.[6]
As relationship between the owners and management and the Government of Montenegro became increasingly sour, there was an ongoing debate within the country about the fate of the company. The size of the company, number of employees, and its impact on the Montenegrin trade balance imply that efforts will be made by the Government to keep the company alive, although sustainable ownership and management arrangements are yet to be made given the current dissatisfaction with Russian owners. On 8 July 2013, KAP officially went bankrupt, having up to that point accumulated a debt of 383 million euros, while the company itself is worth 180 million euros.[7]
