OREANDA-NEWS. January 17, 2014. Kazakhstan Kagazy has agreed to transfer its Class A Warehouse and Container Terminal businesses to Investment Fund of Kazakhstan (“IFK”), as a result of IFK enforcing outstanding debts against the assets of these businesses, as the company said in the press release received by Lesprom Network.

Despite the profitability of the logistics business, where EBITDA grew from almost zero in 2009 to more than USD5 million in 2013, and management’s efforts to restructure the IFK loan, the Company was unable to reach a mutually acceptable restructuring solution. This was due to the gulf between the debt capacity of the logistics business and the size of the IFK loan.

The unsupportable loan was originally drawn down from Development Bank of Kazakhstan (“DBK”) by the Company’s former management and the DBK loan was then purchased by IFK in 2013. The Company has commenced proceedings against former management and shareholders in the London High Court, and alleges that USD 53.5 million of the original DBK loan was misappropriated.

The Company's CEO, Tomas Mateos Werner, commented: "The Class A Warehouse and Container Terminal businesses were unfortunately not profitable enough to carry the IFK debt, which we allege was fraudulently disbursed by the Company’s former shareholders. For over four years we have used the growing cash flow from these businesses to repay the debt. We have also tried to reach a mutually acceptable debt restructuring agreement, which unfortunately has not been possible. Our priority now is to work together with IFK to ensure that the maximum amount of jobs are saved and that service to our clients continues uninterrupted. Our key paper & recycling business remains strong, and I look forward to announcing our plans for the development of this business over the coming months.”