The Only Real Value of Montmontaža is the Business of Split’s Lavčević

In the distribution of large construction projects, there is almost no Montmontaža. Therefore, the actual business results of the holding can best be tracked by how much Lavčević is doing.

Written by: Ivica Grčar
[email protected]

After the scandals involving unsuccessful legally questionable ‘offshore’ transactions of Večernji list, in which one of the buyers ‘from the service’ was Zagreb’s Montmontaža, the company is trying to operate in as much ‘shadow’ as possible. This has intensified since February 2006, when the first man and majority owner of Montmontaža, Nikola Lisičar, died from the consequences of an unresolved assassination. The share of Montmontaža has increased 4.7 times in the last 11 months (from September 2006 to August 2, 2007, from 17,006 to 80,000 kuna). However, given that Montmontaža shares were not actually traded during that period, except for a few attempts that ended with decisions from the Croatian Financial Services Supervisory Agency regarding the prohibition of trading shares and cash payments, experts warn that this is not growth based on the actual business results of Montmontaža.

Director Žibrat Avoids Journalists

Experts attribute the increase in the value of Montmontaža’s shares to their undervalued status at the beginning of their listing for free trading on the stock exchange and the growth in the value of the entire construction industry due to recently contracted large projects. Therefore, the actual business results of Montmontaža can best be tracked according to the achieved business results of Split’s Lavčević d.d., as Lavčević d.d. currently generates the highest revenue within the Montmontaža holding. Today, American John Anthony Rohan, the son-in-law of Nikola Lisičar, the long-time director of Montmontaža and after the transformation the majority owner of Montmontaža, holds a majority stake in Lavčević d.d. In the latest distributions of large construction projects, with the exception of Lavčević, there is almost no Montmontaža. Nothing has changed in this regard even after February 2006 when Nikola Lisičar, the long-time head of Montmontaža, was killed. Given that his murderer has not been discovered to this day, many believe that this murder was a way of ‘settling old unresolved accounts’. Journalists often visited Montmontaža due to various scandals even before the questionable transaction of Večernji list and the murder of Nikola Lisičar, and today many employees of Montmontaža are legally trying to collect their unpaid wages from Libya and other construction sites in the country and abroad.

Vlado Žibrat, the director of Montmontaža, today avoids journalists. This means that he has reason to believe that the damage is less due to the refusal to provide information than to have information about Montmontaža’s operations published. Montmontaža’s business results were not commented on even by companies that used to perform acquisitions for Montmontaža in the past. They all assured us that they know too little about Montmontaža to comment on its operations. Montmontaža is a holding company with six companies in the construction of industrial facilities, seven Lavčević companies in construction, two companies in civil engineering and hydroengineering, two companies in hospitality and hotel management, one in shipbuilding, three in gas distribution, and seven abroad. On its website, Montmontaža presents itself as ‘one of the leading large holding companies in Central Europe engaged in industrial construction, development, engineering, recycling, trading, and distribution of energy.’

All in One Family

However, among the 500 largest companies in Croatia, Montmontaža ranks only 156th in terms of revenue, while Lavčević ranks 365th. Interestingly, the company Lavčević was founded two years before Montmontaža, in 1948, and has between eight and 14 companies in its composition. According to Montmontaža’s website, Lavčević has eight companies, while according to the Court Register, Lavčević has a total of 14 registered companies. In the first six months of this year, Lavčević reported a profit of 7.5 million kuna, about two million more than in the same period last year. The Chairman of the Supervisory Board of Lavčević d.d. is John Anthony Rohan, and the members are Mate Šakić and Vlado Žibrat, the director of Montmontaža. Lavčević is a public joint-stock company, while Montmontaža has been in free listing on the Zagreb Stock Exchange since September 2006.

As much as 55.51% of Lavčević d.d. shares belong to John Anthony Rohan, the husband of Mirela Lisičar, the daughter of the murdered Nikola Lisičar. Interestingly, Mirela Lisičar has 3.29% of shares listed separately next to her husband’s 55.51% of shares. Mirela Lisičar is also a member of the Supervisory Board of the parent company of the Montmontaža holding, alongside Bakir Krajina and Jure Krajnović, while her husband John Rohan is no longer in that Supervisory Board. Rohan, however, still has his office in the Montmontaža Management, and he has also ‘inherited’ Nikola Lisičar’s secretary. From the Lisičar family, Lavčević shares are also held by Anica Lisičar, Nikola’s wife (9.44%), and Darijo Lisičar, the son of Nikola Lisičar (2.07%). Other significant percentages of shares are held by banks with custodial accounts.

Loss of Detached Jobs

According to some stock market experts, the development of construction companies is managed from one place. Because of this, some jobs are not awarded, and their prices on the stock exchange are lowered to buy them as cheaply as possible, while conversely, many jobs are awarded to increase their value as much as possible. Montmontaža attributes its growth from past times to the export of cheaper qualified labor (assemblers) to the markets of developed countries within the so-called detachments (the number of workers who can come to a developed country for temporary work). After the decreasing demand in developed countries for cheaper qualified labor from less developed countries (EU expansion), the number of employees in Montmontaža is constantly declining.

When we last spoke (2002) with the subsequently murdered Nikola Lisičar, Montmontaža had about 2,400 employees, and today there are about five hundred fewer. In 2001, as Vlado Žibrat told us in 2002, Montmontaža generated about 950 million kuna in revenue, and in 2005, before its listing on the stock exchange, 1.1 billion kuna. Interestingly, the late Lisičar saw the business perspective of Montmontaža in servicing jobs. According to Lisičar, servicing jobs will not globalize as production does. He believed that due to globalization, it is difficult to keep production in the local market without it being taken over by global companies at some point. The big and powerful can always push the small and weak out of local markets, Lisičar claimed.

Increase in the Value of Lavčević

As for the quadrupling of the value of Montmontaža shares, brokers warn that Montmontaža initially entered the listing with extremely low prices for its shares. If the increase in the value of Montmontaža shares is compared with the increase in the value of shares of other construction companies, it can be concluded that nothing special has happened with Montmontaža’s shares. Only Lavčević d.d. has truly increased in value. To realistically assess the value of Montmontaža, Lavčević should be consolidated within Montmontaža’s results. Given that Lavčević is listed in the official quotation, while Montmontaža is in the unofficial one, the value of Lavčević’s shares can also track the actual movement of Montmontaža’s shares.