Bandić: Without cutting salaries and employees by 10 percent, Holding faces bankruptcy

The Zagreb City Assembly is discussing the operations of the Zagreb Holding at an extraordinary session today. According to the report from the management of Zagreb Holding on last year’s operations, the company’s long-term liabilities amount to 6.7 billion kuna, and short-term liabilities are three billion, while the loss was 359 million kuna, which is 126 million less than in 2011, primarily due to the increase in prices of ZET and Water Supply and Drainage.

“I regret that we have put ourselves in this situation. I am the least to blame. I do not paint the walls black, but if we do not take action in the next few months, Holding faces bankruptcy. Holding must not jeopardize its existence. It has enormous potential in Zagreb and the entire country, but its financial position today is concerning. We need to reduce the number of employees by 10 percent and cut salaries by 10 percent. Without that, there is no solution for Holding,” said Mayor Milan Bandić at the beginning of the session, as reported by RTL.

“When I left, there were 2 billion kuna in the account at the handover, and today there are 67 million kuna left. The Zagrebčan was already purchased, and Gredelj had already been paid off 70 percent, bought for 88 million euros,” he emphasized.

The mayor pointed out that the Holding’s rating was then BBB-, and it was considered a stable and promising company.

“Today it is at B-, which is a drop of four places, and we barely managed to keep it from going even lower. By the end of July, we agreed with the unions to save 170 million next year. It is not easy to cut salaries, but it had to be done. We are threatened with pre-bankruptcy or bankruptcy if we do not take measures in the next three months. I am convinced that this will not happen, but it will not be easy. The managers of Holding or self-managers did not know how to face the problems and then called good investments misguided. The operations of Holding have been left to chance, there are no financial plans. Zagreb gave them 2.2 billion kuna, and the people of Zagreb 5.5. They wanted me to pay and be silent, but I did not want to agree to that,” Bandić continued.

Bandić shared a comprehensive report on the operations of Holding with the representatives, including a list of surplus employees.

After Milan Bandić, Slobodan Ljubičić, the new CEO of Holding, took to the podium.

“Holding has been brought into this situation by irresponsible management. If our restructuring measures are accepted, they are not the best solutions, but they are the only possible ones. If we do not uncover the causes of this situation, we will find ourselves in it again. We will not have the current assets in three years, so apart from drastic price increases for services, which is unacceptable, or pre-bankruptcy, which I think about every day. The situation dictates that this would be the best, but we will try not to go with that. We will not raise prices, because increasing prices does not raise revenues. Last year, the prices of water, gas, and public transport were raised, which has already resulted in a decrease in demand for them. People are smuggling, saving water and gas, behaving reasonably, and our revenues remain the same or decrease,” said Ljubičić.