No One Will Take the Cotton Industry of Duga Resa

At the round table “Can the state resolve the status of the Cotton Industry of Duga Resa” organized by the Union of Textiles, Footwear, Leather and Rubber (TOKG) held in Duga Resa, Minister of Economy, Labor and Entrepreneurship Branko Vukelić urged creditors to abandon the method of selling the company and convert their claims into ownership shares.

The reason for this, he asserted, is that even after six attempts to sell, there are no buyers willing to pay enough money to make it worthwhile to sell.  “The state, Karlovačka banka, HEP, former and current workers, and other creditors need to decide whether to sell ‘Pamučna’ for about 20 million kuna and receive nothing from their claims or to abandon the sale and exchange their claims for ownership shares. The company has been operating in bankruptcy for five years and is clearly needed in the market; it is only important that it exits bankruptcy so that it can draw funds from domestic and foreign funds, support programs, and restructuring of the textile industry, which will be implemented in the Croatian textile industry over the next five years. After all, all of Europe is providing support for new technologies in the textile industry,” said Vukelić.

According to him, on October 23, a strategy for textiles and clothing and a strategy for leather and leather products will be presented, which will then be submitted to the Government for approval. If accepted, they will bind every government, and they will be accompanied by plans with measures and financial frameworks. The purpose of these strategies is to restructure companies operating in these branches over the next six years, he added. The Cotton Industry has been in bankruptcy for five years and owes 110 million kuna. In six attempts to sell, the price has fallen from 110 to 66 million kuna, and in the meantime, the debt has been reduced by 13.3 million kuna, but interest rates are rising. According to Josip Zidanić, Deputy President of the Union, the two largest creditors, the Ministry of Finance and Karlovačka banka, are claiming 28 million kuna, which with interest amounts to about 40 million kuna. Since they are so-called secured creditors, they will be the first to be satisfied from any potential sale, and “a third of the creditors, which includes former and current workers, have no theoretical chance of receiving anything,” said Zidanić. In his opinion, the only way out is to abandon the sale of the company and to return their claims through shares based on some new value.

Union President Vesna Šokčević believes that a bad decision was made about ‘Pamučna’ a year ago, and in a year it has been confirmed that the sale of a large over-indebted company “leads to someone getting the factory for a kuna, and then the job positions are the most questionable,” she said. She added that it should be kept in mind that as much as 50 percent of the production of the current 370 employees is exported to the European market. Zidanić supported the claim that the factory has a place in the market with data that the company in bankruptcy generates an average of about one hundred thousand kuna in revenue per employee per year, making it the fourth among Croatian textile companies, right behind Čateks, Arena, and Varteks. The President of the Creditors’ Committee Ivan Mrzljak said that tomorrow the Committee will decide whether to propose to the Commercial Court to convene a creditors’ assembly with a proposal for creditors to abandon further price reductions and sales. (H)