Minor Shareholder of Medika Requests Clarification from Hanfa Regarding Sale of Shares to Auctor

Zvonimir Turk, a shareholder of the wholesale pharmacy Medika was unpleasantly surprised by the announcement on the Zagreb Stock Exchange (ZSE) dated June 4, informing the public that the Issuer, namely Medika d.d., is selling 1,700 treasury shares to the largest individual shareholder Auctor d.o.o. at a price of 15,900 kuna per share. As he points out, the investing public is also in shock.

– I believe that the treasury shares should have been offered to all interested shareholders of Medika d.d. in proportion to the number of shares each shareholder owns – says Turk.

According to Medika’s statement, on June 4, 2021, they received an offer from Auctor for the purchase of 1,700 shares of the Issuer marked MDKA-R-A, at a price of 15,900.00 kuna per share, or a total price of 27,030,000.00 kuna.

– Given the need to increase current liquidity, the Management Board of Medika made the decision to sell part of its own shares marked MDKA-R-A, and accepted the offer from Auctor for the purchase of 1,700 shares of the Issuer marked MDKA-R-A, at a price of 15,900.00 kuna per share, or a total price of 27,030,000.00 kuna – states the announcement.

Turk believes that the Management Board of Medika did not make the correct decision as it is more than obvious that this is favoritism towards the largest shareholder since the sale price is 25 percent lower than the market price, lower than the book value (BVPS) of Medika’s shares, and significantly lower than the performance offered by that issue.

The disputed decision of the Management Board is absolutely not in accordance with the principles in the Companies Act that speak about the equal position and rights of all shareholders of a particular joint-stock company. Furthermore, the Management Board’s decision is unethical and creates additional distrust in the functioning of the capital market in Croatia, believes Turk.

The question is whether the Management Board even has the right to make such a decision – it can only propose it to the Assembly. The question arises, says Turk, why they suddenly need money, selling shares below price, when they recently paid dividends?

Turk believes that this is probably a manipulation to the detriment of other shareholders as it is possible that in a few months Auctor will sell the shares back to the company treasury at, for example, 19,500 kuna, and then announce a binding offer of 9,700 kuna. Something similar was done in 2019 when they offered 7,700 kuna per share in a binding offer.

– This warrants punishment for both the Management and the auditing company that either has no idea about the profession or is involved in corruption – says Turk and calls for urgent action from Hanfa, to investigate this case as soon as possible and issue a concrete ruling.

– We do not need a new Agrokor case or the Borg group. It is better for Hanfa to discipline the participants in the capital market as soon as possible than for the Croatian Parliament to deal with it. Likewise, for educational purposes, Hanfa should inform minor shareholders about the options available to them to protect their investments – concludes Turk.

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