Metal-Tech (AIM: MTT), the specialist metal recovery company, said that Uzmetal Technologies of which it has a 50% interest, had won court approval in Uzbekistan to appoint a temporary manager and receive a hearing on September 20, 2007 for an application to appoint a liquidator.
Metal-Tech said it would appeal the decision, stating that it "vigorously" opposes any attempt to liquidate Uzmetal Technologies. Metal-Tech further added that the debt on the balance sheet of Uzmetal Technologies was nothing more than "debts to creditors which are all in the ordinary course of business".
The legal battle appears to have been instigated by Metal-Tech refusing to agree to Uzmetal Technologies wish to pay dividend payments.
Metal-Tech added that if Uzmetal Technologies were to succeed, the financial impact is not expected to exceed US$8 million.
Ran Maimon, Chief Executive of Metal-Tech, added: "Issues relating to Uzmetal Technologies Ltd. have been ongoing since last year, at which time the Company took immediate steps to increase sales from our other existing plants and thereby largely offset the reduction in revenues from the Uzbek plant. The ability of the Company to satisfy current demand for its products from Mongolia, its technical expertise in the engineering and production of quality specialty metals and its growth strategy give the management team and the board confidence that the sales revenue target set for 2007 will be reached."
Shares in Metal-Tech slipped 5.75% to 98.5 pence.