What is happening at Pevec, the stock price has fallen from 216 to 160 kuna

What is happening at Pevec? This year, Pevec’s stock rose from 70 to 216 kuna, only to fall to 160 kuna after a change in shareholders, the Supervisory Board, and Management. The Association of Small Shareholders of Pevec is concerned about the developments at Pevec, which is why the head of the association, Hrvoje Marković, has posed a series of questions to the Management.

– Since the departure of Matko Bolanča from the Supervisory Board of Pevec and the arrival of Jurica Lovrinčević in the Management, which coincided with Dicentra (Pevec’s supplier owned by Lovrinčević and whose CEO was at that time) buying shares from the funds represented by Bolanča, we have noticed alarming things that prompted us to ask the following questions, says Marković.

Small shareholders are wondering why Darko Šket was dismissed considering that he successfully led Pevec through bankruptcy and increased revenues, profits, and the culture towards employees in the company. They also ask whether Pevec’s shares, according to the management’s announcements, will be listed on the regulated market of the Zagreb Stock Exchange and whether the prospectus for the shares will be submitted to Hanfa.

Since Lovrinčević wants to see Pevec as a transparent company, small shareholders are asking him why the previously published presentation of results for the first half of the year was removed from the company’s website the day after Šket’s departure from the management and Lovrinčević’s appointment as CEO?

– Why did he not report the OTC transactions through which Dicentra bought shares from shareholders represented by Bolanča while he was the president of its management? Why does he not report the continuous acquisition of shares by Dicentra considering that he is closely connected to it? Why was Krešimir Bubalo, a professional politician, hired as the director of strategic development of Pevec without a public competition? Why did he remove the public address to Pevec shareholders from Dicentra’s website?, the shareholders list their questions and conclude with: – Why did the Supervisory Board elect Lovrinčević as a member and then as the president of the Management, who has a conflict of interest since he has control in Dicentra, Pevec’s supplier, and in Filir, which is the owner and distributor of Bobi snacks, which started being sold in Pevec’s sales centers in September?, asks the Association of Small Shareholders of Pevec.

Hrvoje Marković, the president of the Association of Small Shareholders, finally notes that his activism in Pevec began with the concern that Samoborka would dominate the Supervisory Board and the Management of the company.

– An action was initiated against the ‘big’ Samoborka, to keep Pevec in the hands of small and medium shareholders, so that now the second largest individual shareholder, Dicentra, has not only three or four representatives on the Supervisory Board but also its owner and former CEO as the president of Pevec’s Management, and the listing prospectus has not yet been submitted to HANFA.

After the announcement of the best results in the history of Pevec d.d. on August 29, the stock price reached a record price of 216.99 kuna, which, considering the annual profit from July 1, 2015, to June 30, 2016, of 34.66 kuna per share, is not much (price-to-earnings ratio (P/E) of 6.3). On September 6, the appointment of Jurica Lovrinčević as a member of Pevec’s management was announced, and since then, the stock price has fallen from 209.79 kuna to 160-170 kuna, a drop of 19-24%, or a loss of 50-65 million kuna in market capitalization, which we primarily believe is a reflection of investor uncertainty about the company’s future operations due to the appointment of a person with the mentioned conflicts of interest first as a member and then as president, and the lack of transparency and listing on the Official Market.

– If General OS in peace Mladen Mikolčević is a representative of veterans on the Supervisory Board, although at the General Assembly he had powers of attorney and represented eight veterans compared to 23 that I had and represented, he could explain why their shares are worth 24% less since the announcement of the decision to appoint Lovrinčević to the Management a week after the announcement of the best results in the history of Pevec as a joint-stock company, or the loss of value of a package of 169 shares for over 8 thousand kuna, asks Marković.

The largest individual shareholder of Pevec with 17.5 percent of the shares is hidden behind a custodial account, but it is actually shares held by Samoborka. The second largest shareholder with 10.75 percent is Dicentra, while the third largest shareholder has 5.7 percent of the shares, and Marković believes that these are also shares indirectly held by Dicentra.