TWO SUPPLIERS to the carmaking industry, both based in the north of Slovakia, have been put up for sale. What makes their sale interesting is that AVC Čadca and AVC Raková were previously part of a troubled company with a history dating back to 1944 which was bought by a private equity firm and restructured. The companies are being sold at a time when the automotive sector in Slovakia is still one of the most dynamic parts of the national economy.
Following the recovery and asset consolidation of the companies, private equity company Penta Investments has launched a tender for the sale of a 100-percent share in AVC Raková and AVC Čadca.
"It will not be a public tender in the form of an advert, but rather will directly address potential bidders" a spokesman for Penta Investments, Martin Danko, told The Slovak Spectator.
The main criteria will be the price offered and the buyer's development strategy. Potential buyers might buy both companies as one package or each separately, said Danko.
"Both options are in play," Danko said. "Since the original AVC was split into two companies as of January 1, 2008, conditions for their separate sale have been prepared: the ownership structure has been made transparent, and the operation has become more effective."
AVC was established in 1944 under the name ADLO as a manufacturer of automotive pumps. Between 1952 and 1992 the company operated as a subsidiary of the Czechoslovak manufacturer of passenger cars and trucks TATRA Kopřivnice. After the fall of the communist regime, in 1992 the company was privatised and changed its name to Automobilová výroba Čadca AVC.
Since 2001 the company had been making a loss, which in 2004 alone reached more than Sk155 million. At the end of 2003, distraint proceedings were initiated by a creditor owed Sk250 million. At that time, the company had liabilities exceeding Sk50 million and faced bankruptcy, according to Danko.
In 2004, Penta Investments took a stake in the company, and initiated a recovery programme. Since then it has invested about Sk200 million in AVC.
"Today, the original AVC Čadca company is a sound business and the plants are ready to welcome strategic investors," Jozef Špirko, a partner in Penta said.
Due to the ongoing tender and the fact that the companies have been operating separately only since January 1, 2008, Penta has not provided the company's financial results for 2007. However, the company provided an estimate of earnings before interest, taxes, depreciation and amortisation for 2008 which for AVC Čadca stood at Sk5.532 million, and for AVC Raková Sk19.194 million. The predicted revenues for 2008 for AVC Čadca stand at Sk242.357 million, and for AVC Raková Sk240 million, Danko said.
"The company, which is a significant employer in the region, providing jobs to 500 employees, represents the high quality of machine production in the Kysuce region," said Danko, adding "Ninety percent of AVC's production goes for export, of which 80 percent goes to EU countries and the rest to the United States."
The main shareholders of AVC are ZSNP, which holds a 73 percent stake, and FBH with 21 percent; small shareholders hold another 6 percent. Penta Investments controls a majority of the shares in AVC through its 99 percent stake in ZSNP.
