The recent announcement by the state shipping company Jadroplov about the intention to initiate a capital increase has shown that the state, despite previous bad experiences, does not give up on this model of reducing ownership stakes in companies. On June 26, Jadroplov announced on the Zagreb Stock Exchange that the Management Board had decided to ‘initiate actions for a possible increase in share capital and will proceed to market research to determine the market price in such a possible increase in share capital’. The fact that the Management Board emphasized the word ‘possible’ is somewhat understandable given the outcome of previous such attempts. Namely, this is already the third announcement of a capital increase for this shipping company in the last three years.
Thus, in the summer of 2021, it was planned to raise at least 50 million kuna, and the state, which holds a 70 percent stake in Jadroplov, was to fall to 39 percent afterward. Dilution of the state’s stake is also a government obligation given the state aid the company has received so far. Recall that the European Commission approved in 2018 the company’s restructuring plan from 2015 to 2019 worth 106 million kuna. According to media reports at the time, the capital increase promised great success. Ten offers were received for the acquisition of a partial package of a total of two million new shares and three offers for the acquisition of the entire package. One of the three bidders was the Zadar-based Tankerska plovidba, which intended to acquire a majority stake in the Split shipping company.
Fruitless Tenders
However, at the very end, the process was halted, the offers were rejected, and the Tankerska offer was declared invalid because it allegedly arrived after the deadline. In the end, according to the order of the Management Board of the Center for Restructuring and Sale (CERP), it all ended with the dismissal of the then management of Jadroplov, led by Branimir Kovačić. The new CEO Ivan Pavlović, known as the Minister of Maritime Affairs in the government of Zlatko Mateša and later the first man of the Port of Ploče, embarked on a new attempt at the beginning of 2022. The planned amount of the capital increase was much more ambitious, between 150 and 350 million kuna. But everything remained just an announcement. CERP states that the eventual sale and/or capital increase of Jadroplov is planned in accordance with the Work Plan for 2024.
– Given that the existence of market conditions for the implementation of the capital increase procedure is currently being determined, the Company will, with the engagement of a financial advisor, explore the market to determine the market price for the sale of shares in such a possible increase in share capital. If the capital increase is successfully implemented, the Republic of Croatia will no longer be the majority owner of the shares – they state from CERP.
Recall that the sale of Jadroplov at auction has not yielded results so far. The Croatian Privatization Fund (the legal predecessor of CERP) announced three tenders for the sale of shares in the company: in 2002, 2003, and 2005. CERP also announced two more tenders during 2014, but both procedures proved fruitless.
The Strange Case of Petrokemija
Lider’s interlocutors from the shipping sector emphasize in an unofficial conversation that the latest announcement of Jadroplov’s capital increase has been met with interest. However, until the management of the state shipping company presents the basic outline of the capital increase plan, none of the potential investors wants to come forward publicly. The mentioned intention of the state to relinquish the majority stake will certainly positively affect the interest of bidders, say Lider’s interlocutors. Of course, the larger the stake, the better, it can be informally heard, and fifty percent is the minimum that would be interesting to investors. Another parameter will be the price of new shares (the stock price of the current ones is now nine euros). CERP has been trying for several years to exit ownership through capital increases, but without much success. Namely, it often concerns companies that are not the best sellers in business terms. One example that confirms this is the case of the Slatina-based Agroduhan, for which a capital increase was planned four years ago. This was soon abandoned because there was no response to the call for capital increase at the beginning of 2020, so CERP returned to the classic auction sale model. After a two-year saga during which there was no shortage of interested parties, a new owner was finally found in 2023. To the surprise of many, it was not some tobacco giant, but the Zagreb Electrical Engineering Company, majority-owned by entrepreneurs Ivica and Franja Josić. A capital increase was also announced for the Požega-based Orljava and the Velika Gorica Aircraft Technical Center (ZTC), for which the Norwegian-Finnish duo Kongsberg and Patria were interested. However, nothing came of that in the end.
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