The year 1999 was a year for the financial stabilisation of many Slovak companies. After the excesses of some companies during the Vladimír Mečiar era, notably the spendthrift ways of steelmaker VSŽ, these companies were forced to adopt strict measures which hurt their production figures and investments. Some shipping and trading companies suffered losses due to Kosovo crisis in the first half of the year.
The oil refinery Slovnaft in March 1999 hired the investment bank Salomon Smith Barney to help the refinery find an investor. In June, Company President Slavomír Hatina declared that Slovnaft would welcome an investor from central Europe. The most probable candidate for the future partner is the Austrian OMV refinery.
Slovnaft posted a nine month loss of 2.7 billion Slovak crowns ($64.8 million) compared to a gross profit of 1.8 billion crowns during the same period in 1998. Company officials expect to end the year in the red due mainly to the formation of reserves for losses resulting from unfavourable exchange rates and foreign currency loans.
Long the flagship of the Slovak economy, the giant Košice steel maker VSŽ found itself on the verge of bankruptcy at the beginning of 1999 due to a loss of 11.06 billion crowns ($263 million) in 1998. The situation improved in May when sales equalled the company's best sales results of the past.
The company's future was keenly watched by the government, which took an unusually close interest in keeping VSŽ alive. Finance Minister Brigita Schmögnerová was given the go-ahead on June 6 to broker a stand-still agreement between the company and its biggest creditors including the state, but no deal has yet been signed. The document, which was to have prevented banks from forcing the company into bankruptcy, had been considered a must for the entrance of a strategic partner.
The results of July talks between VSŽ and US Steel officials in London disappointed the government because the amount offered by US Steel was only $220 million for a majority stake. The state announced that the government would open talks with other investors. However, a revised US Steel offer two months later was hailed by the government as a big improvement.
In September, speculation mounted as to whether former VSŽ President Alexander Rezeš was making a comeback to the company. But a September shareholders meeting reaffirmed the direction that the state and current VSŽ President Gabriel Eichler were taking the company in, and Eichler was re-elected to his post.
Rezeš popped up again on October 22, when 10.75% of the company's shares, which were supposed to have been blocked from trading, were mysteriously unblocked by the Bratislava Stock Exchange and transferred to the accounts of three foreign firms closely connected with Rezeš.
One of the most bizarre events of the year for the current government was the secret sale of a 45.9% stake in Slovakia's most lucrative gas storage company Nafta Gbely to US energy giant Cinergy on June 22. The apparent seller of the stake, a controversial Slovak entrepreneur named Vladimír Poór, was thought to have sold his stake through the Czech firm Konsorcium IPB-All to Cinergy. Poór had bought his share in the company from the FNM privatization agency in 1996. However, Cinergy never confirmed the transaction and the 45.9% stake was given back to the FNM by Poór in mid-October.
The NATO bombing of Yugoslavia in the spring blocked the Danube River and isolated the Yugoslav economy, costing several Slovak companies millions of crowns in lost revenue. Companies like the oil and gas firm Transpetrol, aluminium manufacturer ZSNP and tire-maker Matador reported $13 million in losses related to the Kosovo crisis. Many of these firms were involved in direct sales to customers in Yugoslavia before the conflict.
The firm most affected by the war was the shipyard Slovenské Lodenice Komárno, which reported a loss of 61.86 million crowns ($1.5 million) from January to October 1999. The Yugoslav conflict made it impossible for the SLK to deliver vessels downstream and fulfil many of its construction contracts.
Because the Danube river remains blocked, the ship yard had to reduce its labour force from 1,700 to 750 people. SLK's revenues were down 37.9% in the first 10 months of 1999 and its output down 85.7% compared to the same period last year.
