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Elcoteq applies for controlled management

Finnish electronics service company Elcoteq has applied for controlled management under Luxembourg law in order to maintain its operation, the company said in a statement on Thursday.

The company said it is in talks with private investor Platinum Equity on acquisition of a substantial stake and on debt management.

Elcoteq, whicht set up its Hungarian unit in 1998, once operated three plants in the country but today has only one in Pécs.

Currently about 2,800 employees work in Pécs, down sharply from 7,000 before the global economic crisis hit in 2008.

MTI reported earlier that Elcoteq applied for controlled management after creditors blocked the company's accounts.

"This status (of controlled management) ensures continuous operation and secures a chance to complete the company's screening either with an investor announced earlier or a potential new partner," the company said, emphasizing that neither the company nor its subsidiaries have gone bankrupt.

"Elcoteq has asked its creditor banks to allow a longer period of time for debt repayment", the statement added.

If agreement is reached on the planned transaction with Platinum Equity, Elcoteq's financial position will be considerably stronger, the company said.

The jobs of more than 2,000 workers of the Pécs unit (SW Hungary) could depend on talks with a major investor, trade union leader at the Hungarian Elcoteq subsidiary Béla Novodarszky said earlier, responding to reports of the Finnish company's bankruptcy.

Novodarszky said the procedure in question was not the same as Hungarian bankruptcy procedure, but the accounts of the company including the Hungarian subsidiary were frozen on Monday.

Elcoteq invested HUF 13.5 billion in Hungary between 2003 and 2008 but it was badly hurt by the economic crisis and by a cancelled contract from Nokia.