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2000: Privatisations speed up

January 1:

Consolidation at Slovak steel giant Vychodoslovenské železiarne continues apace, with the merger of daughter companies VSŽ Export-Import and VSŽ Ferroenergy under the wings of VSŽ OceÍ. The new Oceľ was turned into a joint stock company on January 1, leading the drive in VSŽ's once 120-plus company empire towards more transparent control of financial and information channels, preparing the firm for sale later in the year.


January 3:

Finance Minister Brigita Schmögnerová announces a politically sensitive cancellation of a majority of state funds, aiming to meet one of the European Union's 'Copenhagen criteria' for membership - control of state budgetary spending.

The cuts effectively terminate 8 out of 12 existing state funds in the first quarter of 2000. Although the move will not bring great savings, it represents the first in a series of expenditure reductions planned by the government for this year.


January 20:

The buyer for the controversial 45% share in gas storage firm Nafta Gbely is revealed as state gas utility Slovenský Plynárenský Priemysel (SPP), which has agreed to pay 1.1 billion crowns ($26 million) to the FNM privatisation agency in return for 45.9% in Nafta shares. Through the deal, fixed at a share price of 750 crowns, SPP will increase its current holdings in Nafta to 55.9%. The purchase will finally give Nafta the strong shareholder it needs to restructure its loan portfolio and rebuild its ageing storage tanks.


January 28:

Rolls Royce decides not to sign a contract on the certification of jet engines produced by Považské Strojárne Letecké Motory of northern Slovakia's Považská Bystrica (PSLM-engineering works). The letter of intent between the two firms expired on December 20, says Paul M. Kaye, Rolls-Royce's central European director. Kaye says that high testing and licencing costs were the main reasons Rolls Royce abandoned the agreement. However, the cloudy structure of PSLM shareholders also contributed to the decision.


February 9:

US firm US Steel reconfirms its interest in buying a majority stake in troubled Slovak steel maker VSŽ even though its bids have so far been rejected as too low. The American steelmaker submits its second offer for entry into VSŽ, keeping hopes alive that the troubled VSŽ will eventually find a quality strategic partner.


February 18:

The unemployment rate in Slovakia, which is calculated from the number of unemployed available to take a job, hits 19.53%, up 0.44% from the month before and 3.39% from January 1999, the National Labour Office (NÚP) says. The rate is the highest in Europe.


March 14:

The Economy Ministry, which holds a 90% stake in energy utility Slovenské Elektráne (SE), fires Štefan Košovan as head of the SE Board of Directors during the board's general assembly meeting. The decision is taken on the basis of the ministry's four month investigation into SE's operations.


March 20:

Bearing a 7.35% coupon, Slovakia launches its second Eurobond issue and sees demand at twice the actual volume of the issue with the spread falling from the expected 220 to 240 basis points above 10 year German Bunds to 217. The figures provide a favourable comparison with last year's first issue of Eurobonds. The comparative success of this issue is one of the clearest signals yet that Slovakia is now a positive destination for investors, and that the country has grabbed the interest of foreign investors over the last 12 months.


March 21:

Finance Minister Brigita Schmögnerová announces that Slovakia will not ask for a structural loan (EFSAL) from the World Bank if the provisions stipulate a parallel stand-by loan provided by the International Monetary Fund (IMF). The minister feels the acceptance of a stand-by loan from the IMF to be a "certain degradation of Slovakia" and, moreover, counterproductive in Slovakiaşs efforts to join the OECD.


March 31:

Oil giant Slovnaft and Hungarian oil and gas firm MOL sign a deal which creates a central European fuel giant and is the first major regional cross-border merger in the sector. Under the agreement MOL will take a 36% stake in Slovnaft for $262 million and has an option to acquire a majority stake in the firm in two years. The deal will leave Slovnaft set to benefit from MOL's ambitious plans for regional expansion using both firms' resources.


April 3:

Following its own privatisation plan, the government's economic ministers give the go-ahead for the privatisation of a 49% stake in Transpetrol during their weekly meeting. The move leaves Bratislava-based refinery Slovnaft the front-runner for the stake and reconfirms the government's commitment to privatisation and eventual liberalisation of the sector.


May 2:

Economic ministers approve a proposal for the second phase of pre-privatisation restructuring of selected banks which will see 31 billion crowns of bad loans transferred from Všeobecná úverová banka (VÚB) and Slovenská sporiteľňa (SLSP). The move will see the share of classified loans at the banks fall to 20% of their total loan portfolio from an original 47%.

The transfers are vital to the privatisation process of both banks. SLSP is due to be privatised by the end of this year and VUB early next year.


May 10:

At a regular session the government rejects a new tax incentive plan for investors that would improve conditions for foreign companies and give some tax holidays to domestic firms. Government representatives say after the decision that they took the move in light of the current squeeze on the revenue side of the state budget, and shied away from a plan that would have seen a large dip in cash inflows from corporate tax.


May 17:

Traders and investors welcome government approval of the creation of an independent body to regulate the Bratislava bourse - a move seen as crucial to Slovak membership in the Organisation for Economic Cooperation and Development (OECD) and later the European Union and for the transparency of the market itself and subsequent investor confidence. The date for the body's start is preliminarily set for July 1.


May 24:

Looking to boost its privatisation programme, the government approves the privatisation of gas monopoly Slovenský plynárenský priemysel (SPP), asking 100 billion crowns ($2.12 billion) for a 49% stake in the world's second largest gas distributor. Key points in SPP's transformation plan include the creation of a joint stock company, the separation of the transit, distribution and natural gas trading arms within the accounting of the company, liberalisation of foreign trading of gas, opening of the domestic market and a re-evaluation of the present price tariffs for natural gas.

The move is a further sign of the government's commitment to privatisation and important in planning budget revenues for 2001.


May 29:

Telecoms colossus Deutsche Telekom (DT) emerges as the most likely winner of the tender for state-controlled Slovenské telekommunikácie (ST) after Telekom Austria pulls out of the running for the firm, citing an impending float on the Austrian stock-market and internal restructuring. The news comes just weeks before the government is due to select a strategic investor for the firm and leaves just Dutch KPN and DT in the race.


May 29:

Volkswagen Slovakia representatives open a new production unit in Martin producing two million components and employing 450 people. Volkswagen Slovakia has so far invested 10 million Deutsche marks in the purchase of a production hall, lots and infrastructure, and plans to invest a further 40 million marks into new equipment.


June 6:

Globtel GSM shareholders decide that the government's 36% stake in the largest mobile network operator in Slovakia will be issued on capital markets - the first ever government-owned share to have been sold in this way. The Economy Ministry says that the placing of an as yet undetermined portion of the stake on the Bratislava Stock Exchange was also under consideration to complement the issue of shares on foreign bourses. The move is expected to maximise the value of the stake and also, if put on the BSE, give a small boost to a stagnant market.


June 8:

Cabinet agrees to a 2.5 billion crown government bail-out for the struggling Slovak-Russian financial house Devín banka, claiming there is little else it can do. The move brings criticism of both the state and the National Bank of Slovakia (NBS) for failing to properly supervise the banking sector. The near-collapse of Devín banka comes after three other similar-sized banks crashed in the last ten months.


June 20:

Six months after its original deadline, parliament approves revisions to the Bankruptcy Law in one of the most important legal changes for the last few years, one which promises to breathe new life into the country's corporate and banking sectors. Approval of the legislation, which comes into effect as of August 1 this year, demands wholesale revisions in 14 laws, including the Commercial Code, Civic Code, Tax and Custom Laws.


July 1:

Only 24 hours after board members resigned in frustration over shareholder apathy towards a capital hike, the medium-sized bank Dopravná banka is put under a caretaker administration by the central bank, unable to cope with increasing losses, and failing to create sufficient provisions to cover classified loans. Dopravná becomes the fourth Slovak bank to fall in the last year, following AG Banka, Priemyselná banka and Slovenská kreditná banka.


July 3:

An amendment to the employment law is passed by parliament, redirecting funds from social welfare benefits into job creation. The scheme aims to revolutionise welfare for the unemployed and motivate unemployed people to look for permanent jobs more actively. The move will see 2.3 billion crowns ($51.5 million) cut from social benefits.


July 28:

Slovakia is invited to join the Organisation for Economic Cooperation and Development (OECD), ending more than 18 months of negotiations.


August 9:

Cabinet decides on the allocation of 25 billion crowns from the sale of 51% of Slovak Telecom to Deutsche Telekom - 9.5 billion crowns will be used for previously approved development projects, 10 billion crowns will repay loans with government guarantees due this year, a further 3 billion crowns will settle debts in the health care sector and 1.06 billion crowns will be spent by the State Road Management Fund.


September 11:

European giants Ruhrgas, Gaz de France and SNAM announce they are to form a consortium to bid for a 49% state stake in gas distributor Slovenský plynárenský priemysel (SPP). The move jars the Russian gas firm Gazprom, which is also interested in the stake, and comes only days after Economy Minister Ľubomír Harach returns from an inter-governmental meeting in Moscow to discuss plans for a new pipeline running from Siberia through Poland and Slovakia.


September 14:

An official opening ceremony marks the start of German firm INA's 4.5 billion crown ($90 million) investment in the northern Slovak town of Kysucké Nové Mesto. The construction of a new plant for manufacturing ball-bearings will see more than 1,000 people employed in the next five years in a region where 3,300 people were out of work at the end of August - an unemployment rate of 21.2%.


September 19:

News is released that the sale of Investičná a rozvojová banka (IRB) has so far attracted only one interested party. The government is forced to put back the date for registering preliminary interest in the bank one month to October 1. The government insists that despite the setback the sale of the bank remains on track.


October 12:

Shareholders at steel maker VSŽ approve the entry of strategic investor US Steel into the company.


October 24:

Government representatives meet unofficially with German auto giant BMW on Slovakia's being a possible location for a $440 million investment into a new auto construction plant. Slovak investment agency SARIO is later forced to deny accusations by the Slovak honorary consul in Baden-Würtenberg that they have botched what would have been the third largest investment in the history of Slovakia by releasing information about the meeting.


November 6:

Lyonnaise SR Bratislava, daughter company of French-Belgian firm Lyonnaise des Eaux, praises an agreement between the Slovak Agriculture Ministry and the Privatisation Ministry on the transformation of state-owned water utilities, Vodárne a Kanalizácie (VaK). Lyonnaise SR director Antonín Pokorný warns that Slovak citizens may have to prepare for a water price hike because costs paid for cleaning and processing of water and its distribution will have to be recouped by future investors.


November 24:

In line with its transformation programme, Slovak Rail (ŽSR) plans to cut 4,400 jobs in 2001, 2,500 in 2002 and 5,900 in 2003, the firm announces. ŽSR, the largest employer in Slovakia, currently employs 45,521 people.


December 4:

State-run power utility Slovenské elektrárne (SE) reports a pre-tax loss of 676 million crowns ($13.52 million) for the period January to October 2000, compared to a loss of 3.92 billion crowns ($78.40 million) for the whole of 1999. SE director general Vincent Pillár says the company, which should be privatised before the end of the current government's term in 2002, will end 2000 in the red.


December 13:

The government announces that it is to pump 1.5 billion crowns ($30 million) into continuing its new work-for-welfare employment programme, turning the project into the cornerstone of its active labour policy next year. The job scheme, started in August this year, has helped cut a soaring unemployment rate of 19.41% in July to 16.58% in October.


December 13:

Parliament passes the budget for the year 2001, keeping to the government's proposed deficit of 37 billion crowns. Ninety of the 139 MPs present support the cabinet proposal. Government officials say the number of votes cast in favour - many more than needed - showed that the ruling coalition remains united and fiscally responsible. MPs had been placated by ministers before the vote after demanding spending increases that threatened to push up the deficit by as much as seven billion crowns.


December 13:

Austrian bank Erste Bank is revealed as the Privatisation Ministry's preferred choice as winner of an 87% stake in the country's largest bank, Slovenská sporiteľňa (SLSP) December 13, after the finance house puts in an 18.4 billion crown ($360 million) bid for the share. The sale is three weeks ahead of schedule and is widely considered a great success.

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