Duvnjak: There Are Still No Conditions for Terminating the Contract with Zlomrex

Zlomrex has not provided the Croatian Privatization Fund (HFP) with evidence of the termination of the sales contract for the Split Steelworks with the Carlson fund nor of the removal of the City Bank’s lien on the shares of the Steelworks owned by Zlomrex, so the HFP cannot yet conclude an agreement with Zlomrex to terminate the purchase agreement for the Split Steelworks, reported HFP President Vedran Duvnjak at today’s meeting of the HFP Management Board (UO).

These two conditions are important because after their fulfillment, neither Carlson nor City Bank would be able to obstruct the registration of HFP’s ownership of the Split Steelworks and the search for a new strategic partner, says Duvnjak. According to the proposed agreement, Zlomrex would sell all the shares of the Split Steelworks it owns, free of all encumbrances, to the HFP for one kuna, with the HFP purchasing part of the Split Steelworks’ obligations to Zlomrex in the amount of 10 million euros. This is the amount of investment that Zlomrex has realized in the Split Steelworks. All other claims would be unconditionally written off by Zlomrex, Duvnjak reported, noting that Zlomrex’s total claims against the Split Steelworks amount to 26.4 million euros.

The alternative to the agreement is the activation of 75 million kuna in corporate guarantees for Zlomrex’s failure to execute its business plan and 12 million kuna for failing to meet obligations to employees, but this means opening long-term court disputes, so the HFP believes it is better to conclude an agreement, says Duvnjak. The expropriation procedure for Zlomrex should be carried out without complications, but this process is taking too long, believes HFP Management Board member, unionist Ozren Matijašević. According to Duvnjak, Zlomrex has provided the HFP with data showing that the total fixed assets of the Split Steelworks are worth 614.2 million kuna, and the business loss in 2008 was 101 million kuna, while for the first nine months of this year, it amounts to 79.5 million kuna. According to this data, the Steelworks has been in financial blockade of at least 70 million kuna, and total liabilities amount to 443.7 million kuna. (H)