Montenegro's only aluminium plant and biggest exporter declares bankruptcy

Montenegro's only aluminium plant is kaput. The company fell into bankruptcy on Wednesday after several months of failed reorganization attempts.

The company, Kombinat Aluminijuma Podgorica (KAP), is Montenegro's top exporter.

A Montenegrin court declared the company bankrupt and has ordered its sale. The proceeds will be used to repay the firm's $516 million debt – an amount which, according to Reuters, equals 10% of the country's economic output.

KAP employs 700 people, according to a local news site (Serbian language). Employees believe an investor will buy the company and save their jobs. A union president told reporters that the bankruptcy would not affect employees.

According to one news report, Rusal- the world's largest aluminium company – was interested in purchasing KAP in 2005. Instead, Salomon Enterprises – a company by the same owner as Rusal – bought majority shares. The state took back half of these shares several years later in a debt equity swap.

Montenegro has been facing a lot of international pressure – especially from the European Union – to let the heavily-subsidized firm die. Earlier this year, the International Monteary Fund urged lawmakers to shut the debt-ridden plant as it was soaking up €3 million in state subsidies each month.