The FNM national privatization agency intends to start exchanging FNM bonds for shares as soon as in the first half of 1999, said FNM President Ľudovít Kaník on February 19.
The exchange cannot be launched, however, until certain legislative changes are made. First of all, the 1995 Law on Strategic Companies, which forbids the sale of state firms vital to the economy until 2003, must be revised to reduce the number of off-limits companies. Following this, the Law on Large-Scale Privatization must be adjusted.
Kaník said he expected amendments to both laws to be passed by parliament, since the success of the FNM bond exchange programme is conditional on the FNM having high-quality shares in its portfolio to offer bond-holders.
After creating the necessary legal framework, Kaník explained, the government must decide on the amount of property they will make available and which particular companies will be included in the exchange. The FNM has said it would like to see 20% stakes in individual state companies up for grabs.
In Kaník's words, the 'bonds for shares' exchange plan should apply also to the privatization of state-run Slovak Telecom (ST). "I think that a certain combination of privatization tools would be advantageous in this case," he said. "About 20% of shares should be exchanged for FNM bonds, while a strategic investor should enter the company through an increase in the volume of its share assets. Nevertheless, the state should keep a majority in ST."
According to Privatization Minister Mária Machová, the privatisation of Slovak Telecom should be completed by the end of 1999. An investor should be chosen through an international tender this summer.
