I will drink my first pelinkovac as a toast when 20 million euros from the recapitalization lands in Badel’s account

The company with a very rich historical narrative (especially those related to transition and transformation) is today in majority state ownership (68 percent) and simultaneously in a delicate business situation as its business results over the past six years have been very poor – until last year, when Badel 1862 finally made a profit.

In circumstances where all of the company’s assets are pledged and the equity is negative, Badel’s current value lies in its market share, brands, knowledge, and experience. According to Prime Minister Orešković’s announcements that the state must divest from companies that are not in strategic interest, it can be expected that this will be a year of bitter wormwood for Badel, in which the state will finally have to make some decisions. Otherwise, without a serious transformation of business processes, the company will not get far. This is also hoped for by Ivo Markotić, the company’s leader who took this position in mid-2013, ‘from the third’ (having previously declined the offer twice). This financier was initially quite reserved during the conversation as he had not given any interviews to the media until now, believing it was better for the company, but later relaxed and explained to us what needs to happen in the company for him to taste the almost synonymous Badel – Pelinkovac.

• Where has the pre-bankruptcy settlement stalled and how much does the interruption of the process hinder your further development and finding a strategic partner or new owner?

– Badel entered pre-bankruptcy settlement in 2013 due to excessive accumulated liabilities and illiquidity. On 700 million kuna of assets, liabilities of 600 million kuna were created, meaning 85 percent of the balance sheet was liabilities. Concurrently with the opening of the settlement, the Tax Administration conducted a tax audit and initiated administrative proceedings against the former management, issuing a decision to terminate the pre-bankruptcy settlement. This decision has been in effect to this day, which creates significant problems for us, and Badel is today a prisoner of that process. We expect the Tax Administration to issue a second-instance decision so we can move forward.

• How did you manage to achieve a profit with only six percent higher revenues last year, reach settlements with, for example, former shareholder Ante Perković, Bobit, and Dingač, pay off debts, regularly fulfill obligations, and reorganize the company? – We transformed from a loss-making company into a profitable one according to the restructuring program that includes five basic measures: closing unprofitable parts of the business, reducing the number of employees, cutting costs, selling real estate, and reorganizing. The program was accepted by the state as the owner at the end of 2013, but it did not financially participate in its implementation, primarily in the severance of surplus employees, 170 of them, which will cost us about 17 million kuna. So far, we have managed to accommodate 120 employees from our own resources. By competing in the market to increase revenues and cutting costs from our own sources, we created financial space for the implementation of restructuring. Our main goal now is to reach one million kuna in revenue per employee.

• What is ‘your’ drink?

– Nettle tea. But if you ask me about Badel’s assortment, before coming to Badel, I only tasted Glembay, which is certainly better for me than most French cognacs. I know it sounds incredible, but I have not tried pelinkovac until now. It is a corporate myth that when someone comes to Badel and drinks its pelinkovac, they become a badelovac. I find it hard to assimilate, so I vowed not to drink that beverage until the recapitalization is carried out. When 20 million euros lands in Badel’s account and we rid ourselves of all these burdens and worries, I will be ready to toast with pelinkovac.

You can read the entire interview in the new issue of Lider.