HDZ will support the proposal for the City of Zagreb to enter as a strategic partner in the Immunological Institute, announced on Friday by the president of the Zagreb HDZ and the City Assembly, Andrija Mikulić, on the occasion of the conclusion to accept the Model of Strategic Partnership for initiating production at the Immunological Institute between the City and the Government, which Mayor Milan Bandić submitted to the agenda of the Assembly meeting on Thursday, April 26.
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“Production must be initiated, and this will be achieved through investment via recapitalization. The entire institute has been stagnant for too long, unfortunately due to financial problems. However, in this case, we all need to get involved to revive the institute with significant results and recognizable product quality, plasma, and antivenom, and start production,” Mikulić stated for Hina.
The justification for Bandić’s proposal states that its goal is to achieve the public health interest of the Republic of Croatia and the long tradition of the Immunological Institute’s existence – since 1893, as well as the developmental potential of production and the market.
According to the proposed model, the City of Zagreb will recapitalize the institute with 110 million kuna (possibly in tranches according to the business plan approved by the parties), for the purpose of settling overdue obligations to suppliers amounting to 35 million kuna, initiating the production of viral vaccines at existing locations, and contractual production of blood derivatives outside the institute’s facilities until the construction of a facility at a new location.
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The model defines the basic principles based on which the strategic partnership and the entry of the City of Zagreb into the ownership structure will be implemented. The relationships between the state and the city regarding the strategic partnership and the entry of the city into the ownership structure, in equal ownership ratios with the state, are regulated in the manner contained in the model, and represent the foundation and framework for further regulation of the mutual relations between the state and the city.
The purpose of the strategic partnership is to ensure the Institute sufficient funds to carry out necessary actions and procedures related to investments in facilities, equipment, and other forms of property, including necessary improvements to business, production, storage, and other processes for the purpose of continuing production at existing locations. For the further development of the institute, which, according to existing studies, requires an investment of approximately 300 million kuna, strategic partners will, in the second phase of the strategic partnership, with the aim of modernizing operations and production, develop an investment plan for new production facilities in accordance with updated feasibility studies.
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This would confirm previous estimates of the necessary amounts and dynamics of additional investments or determine possible material changes in relation to existing studies.
Under the proposed model, the Government would accept the recapitalization of the institute by the city, in such a way that the city enters the ownership structure through a strategic partnership with the state and other state shareholders. It is stated that recapitalization is the simplest and fastest way for a strategic partner to enter and obtain financial resources, without which the continuation of the institute’s work and operations is impossible.
Recapitalization would ensure urgently needed funds to settle creditors and implement procedures related to necessary investments in facilities, equipment, and other forms of property for the purpose of continuing production at the existing location and preparing for production at the new one. At the existing location, the production of viral semi-finished products is possible with appropriate investments, allowing the company to finance its costs until the new factory is built.
Initiating the production of viral vaccines involves comprehensive optimal modernization of the facilities and accompanying structures. It also includes training existing and hiring and training new human resources, with the aim of achieving safe conditions for obtaining all necessary permits and reaching the volume and comprehensive production and sales program sufficient for the sustainability of the institute. The estimated amount for this purpose is 32 million kuna excluding VAT.
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It is estimated that 43 million kuna will be invested to finance operational business costs and working capital during the period of execution of works and modernization of facilities and equipment, until the moment of achieving adequate free cash flow from which the institute will be able to service credit obligations and interest obligations.
By accepting this model, the Government will ensure exclusivity for the City of Zagreb in negotiations and the implementation of all necessary actions for the purpose of realizing the recapitalization. The exclusivity period will last 90 days from the date of signing the model under which the recapitalization is intended to be realized.
By accepting the model, the City of Zagreb in good faith accepts the essential elements and conditions for the implementation of the recapitalization, with the understanding that all provisions of the model, except those relating to exclusivity and confidentiality of information, are non-binding in nature. The detailed conditions of the strategic partnership through recapitalization will be regulated after the implementation of ‘due diligence’ and will be an integral part of the recapitalization agreement, the shareholders’ agreement, and other transactional documentation, which must be approved by the City Assembly.
