After its owners and creditors failed to support its restructuring plan, the state has decided against yet another capital injection into the producer of the legendary footwear brand.

The Slovenian Sovereign Holding (SSH), which manages about a 61% state share in the Tržič-based company, expected the Peko management to present an ambitious plan for restructuring that would enable sustainable operations.

But after Peko shareholders - which apart from the state include state-owned investment firm DSU, and banks Gorenjska banka and SKB - got acquainted with the plan in early January, they decided not to back it.

SSH subsequently assessed that the planned capital increase by the state would be neither admissible nor sufficient to avert bankruptcy if creditors were not prepared to convert part of their claims into capital to enable the company to get a new loan.

Insufficient free assets which could be used to secure new loans are an obstacle to restructuring, the custodian of state assets concluded.

The Sovereign Holding also noted that the state had already provided funds for the company on several occasions in the past, with the last major recapitalisations carried out in 2012 and 2014.

The concept of salvaging the company was based on participation of all stakeholders, the owners and creditors, it stressed.

What the decision means for Peko is not fully clear yet, but the company is likely to go into receivership. Lacking fresh money, Peko cannot buy input material, so production has been suspended for most of the time.

Peko boss Matjaž Delopst declined to comment on SSH's decision today, but he did express regret because he had believed the company could be salvaged, and because of the effort invested it its restructuring.

More about Peko's fate should be known early next week, when the company's supervisory board is due to discuss the situation. Receivership is the likeliest scenario.

Employing a workforce of 156, Peko owes about EUR 7m in debt, of which EUR 3.7m in short-term liabilities to banks that fell due at the beginning of the year.

Peko has been ailing for years, with its revenue dropping due to occasional suspension of production and its number of employees decreasing. The company's assets have been mostly sold to cover the costs of production.

A total of 77 Peko stores have been sold in the last seven years.

There have been several proposed solutions for revival of the company, including a sale to Croatia's Osimpex, but all of them eventually fell through.