off-the-wire

Hungary gives Dunaferr steelworks $45 mln bailout to pay wages

Kitco Media
By Reuters
Published:
Updated:
Reuters
BUDAPEST, Feb 1 (Reuters) - Hungary's government will pay salaries at debt-laden steelworks ISD Dunaferr for the next six months at a cost of more than 16 billion forints ($44.8 million), Prime Minister Viktor Orban said on Wednesday. Budapest's municipal court ordered the liquidation of Dunaferr in December, shortly after Orban's government opened the door to the procedure against the company that employs thousands and which has struggled to keep operations running. Orban said a working group that includes the ruling party lawmaker from the Dunaujvaros region where the steelworks is based would make efforts over the next six months to find an investor who could transform Dunaferr into a viable business. The company, which makes products for the engineering, automotive and manufacturing industries, employs some 4,000 people directly, down from 11,000 in the 1960s.


Economic fallout from the war in neighbouring Ukraine, including inflation soaring to levels not seen in decades and Hungarian growth at a standstill, has added to pressure on the already struggling steel company.


"Dunaferr has been ruined," Orban said in a Facebook video on Wednesday. "(Ruined) by previous owners, management and finally, the sanctions from Brussels." In October Orban's chief of staff Gergely Gulyas told a news conference that the government was examining the company's ownership structure and whether it can give any help to Dunaferr considering European Union sanctions against Russia. The plant is 99.6% owned by Cyprus-based Steelhold Limited. Hungarian media outlets have reported that one of Steelhold's stakeholders is Russian development bank VEB. According to the last available data in company records, in 2019 Dunaferr made a loss of 54.1 billion forints on revenue of 288.8 billion forints.


Gulyas said in October that the company had close to 500 billion forints worth of debt. ($1 = 357.16 forints) (Reporting by Gergely Szakacs; Editing by Kirsten Donovan)

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