Kymiring made a whopping million for taxpayers – The final fate of the money looks grim

The Finnish taxpayer lost 11.6 million euros when the Päijät-Häme district court declared the railway company KymiRing Oy bankrupt in April.

Public money was put into the track and related projects by the Ministry of Education and Culture (OKM), the event company of the city of Lahti and the municipality of Iiti.

OKM is now recovering state subsidies of 6.5 million euros.

– All granted state grants will be recovered. I think the process will be finished by mid-May, Inspector General of the Youth and Sports Policy Department of the Ministry of Education and Culture Esko Beach says.

KymiRing Oy has non-privileged debt of 22.5 million euros. In the payment of debts, priority is given to secured creditors, to whom Kymiring owes approximately EUR 10.5 million. None of the entities that used public money are secured creditors.

There is no guarantee of getting the money back anyway. In the bankruptcy comparison calculation, the realizable value of Kymiring’s assets, i.e. the cash that would be obtained by selling the assets, was 6.2 million euros.

– I’m not going to evaluate our position in the recovery process or what we get back from the bankruptcy estate. We’ll handle it as best we can. The administrator of the bankruptcy estate is looking at how much money is left to distribute to creditors, Ranto commented.

“Irresponsible”

Lahti Events, the event company of the city of Lahti, lost 4.6 million euros in Kymiring’s bankruptcy.

Lahti was not the owner of the track, but its subsidiary had to organize three international sports events at Kymiringi last year. The plans did not materialize due to the unfinished track.

– Losses consist of two parts. First of all, Lahti Events had paid booking fees for several events, the biggest of which was of course MotoGP, the mayor of Lahti Pekka Timonen says.

– The railway company should also have paid damages to Events, because it could not guarantee the conditions. For example, temporary stands had been ordered for MotoGP, which had already been packed on the ship when it became clear that the race could not be held. Events had to pay its own subcontractors.

Having run into financial difficulties, it was decided to close down the operations of Events in July of last year. CEO of Events Emilia Mäki said For Etelä Suomen Sanomatthat the downfall of Events was “exclusively due to Kymiring”.

Mayor Timonen is not confident that Events would get their money back.

– It looks bad. They are unsecured debts, so we don’t have high expectations. When it comes to a company 100% owned by the city of Lahti, the taxpayers end up not getting any money.

Timonen now admits that Events perhaps took an unnecessarily big risk considering its size. He criticized the actions of Kymiring and its shareholders.

– We are very disappointed with the railway company’s unprofessionalism and inability to perform its own task. The railway company was not trustworthy. The action was irresponsible.

Big money

The municipality of Iiti made a loss of 529,000 euros.

The municipality invested 500,000 euros in the railway company and was also involved as a partner. Iiti was supposed to sell its approximately nine percent stake in the railway company last year, but no deals were made. Iiti’s share capital was 29,000 euros.

– We had a pre-contract for the sale of the share, which expired at the turn of the year. There were no new talks about selling after that, mayor Jarkko Salonen tells.

Piskuinen Iitti paid 1.9 million euros when highway 12 passing by Kymiring was improved and a multi-level interchange was built for the track.

The Finnish Railways Agency invoiced the municipality for the construction project, but according to the agreement, the municipality collects the money from Kymiring. The railway company failed to pay approximately 500,000 euros.

Salonen believes that Iitti will still get the money back.

– Municipal debt collection handles the supervision of the matter. In the land use agreement, the original owner of the land, A. Ahlström Kiinteistöt Oy, is also jointly liable. In our opinion, what we receive should be secured. If Kymiring is unable to complete it, the gaze turns to A. Ahlström, who is jointly responsible.

Iitti wrote down 500,000 euros in last year’s financial statements.

– We are a small municipality, 500,000 euros is a big amount for us. Fortunately, there have been a few financially good years. The loss does not cause greater efforts, says Salonen.

Strong guidance

Kymiring received a state subsidy because it was considered a nationally significant project. The purpose was to improve the conditions of motor sports in Finland.

– After Kymiring had been raised as a nationally significant sports venue project in the opinion procedure, the political guidance in the direction that Kymiring should be granted state aid was quite strong, Ranto recalls.

A support package of three million euros was granted to Kymiring from the allocation for the construction of sports facilities, which is distributed from Veikkaus’ profits. In 2018, the railway project received a grant of 3.5 million euros. It was based on the additional allocation granted by the parliament in the supplementary budget the previous year.

The grants were paid because OKM considered Kymiring to have been completed in 2019, based on the certificate of the building inspector of the municipality of Iiti.

There is still no track suitable for MotoGP.

– We had to build a nationally significant sports venue. Kymiring was completed in such a form. National level events have been held there for many years. MotoGP was not the reason why the track was subsidized, says Ranto.

Both Iitin Salonen and Lahti Timonen think the saddest thing is that nothing is happening in the area of ​​the track at the moment.

– It is an area of ​​150 hectares with 151,000 floor square meters of building rights for business that relies on the railway. If the area is built up, it will affect the whole vitality considerably, says Salonen.

– The worst option is that nothing happens on the track. The economic area of ​​Lahti benefits significantly from the fact that there is activity on the track. That is the whole reason why Lahti Events was involved in this, Timonen reminds.