Reverse flow. 34% of shares in fuel transporter Transpetrol have been grabbed back from minority owners by the state.
"The Finance Ministry simply corrected the decision of the Central Securities Register (SCP) and shifted the shares back," said Miloš Surovič, director of the capital market department at the Finance Ministry.
But the unilateral move infuriated minority shareholders, each of whom had bought 5% chunks of the seized Transpetrol stake. Jaroslav Žák, president and general director of Bankers Trust ICC, represents the minority shareholders and says he is convinced the ministry's claw-back of the shares was illegal. "We got shafted , but we had counted on this possibility," said Žák. Seven minority holders are demanding 2 billion Sk ($56 million) in compensation.
Transpetrol is a state-owned company included on a list of so-called 'strategic' companies which cannot be privatised until a time set by the state. 34% of those untouchable Transpetrol shares were seized on October 6, however, when a district court in Vranov nad Topľou and subsequently a higher court in Prešov (both eastern Slovakia) ruled that the Finance Ministry was obliged to settle a claim of 43 million Sk ($1.2 million) towards a company named ILaS. The courts added 17% interest on the debt and court fees to the sum.
ILaS promptly sold its claim to a company named C.S.I.-CD, which then asked a bailiff to enforce the claim. The executor offered them shares in several state-run companies in exchange for the debt; C.S.I.-CD picked Transpetrol, since the nominal value of its shares was much higher than that of other offered companies, such as DMD Holding, ZŤS TEES Martin, Považské Strojárne and others. Transpetrol has 1900 shares in its portfolio, and the nominal value of one share is one million Sk.
The courts then okayed the confiscation, and 34.05% of Transpetrol shares were duly transferred from the account of the Ministry of the Economy. According to the confiscation order, the bailiff was supposed to enforce a claim amounting to 65.5 million Sk.
The Economy Ministry jumped as if stung, and on October 23 filed a complaint with the Office of the Attorney General regarding what it considered an unlawful transfer of the Transpetrol shares. The ministry asked prosecutors to review the court process that led to the share transfer.
Analysts said that Transpetrol had actually not been privatised by the share seizure, despite the provisions of the Strategic Companies Act. "It is a crazy situation, but Transpetrol wasn't privatised," said Martin Kabát, a securities analyst with Slávia Capital brokers several days after the transfer. "The Finance Ministry paid its obligation to a private company with shares instead of money, because it simply didn't have any money,"
With the shares now transferred from the Economy Ministry's account, a new player entered the game - Žák's Bankers Trust ICC, which has no connection to the American investment bank of the same name, and which describes itself as a "non-bank bank."
"For us, this is a matter of principles," Žák said. "We want to defend the business interests of the minority shareholders and uphold the principles of democracy in this case."
In the meantime, C.S.I-CD sold parts of its stake to six other companies, each of which bought approximately five percent stakes.
On November 26, the minority shareholders initiated a shareholder's meeting which was supposed to confirm the transfer of the 34.05% of shares. But the ministry, as the majority shareholder, blocked the wishes of the new minority shareholders.
"We do accept that a minority shareholder has the right to call a shareholders' meeting, but we don't accept these [new shareholders] as legal shareholders," said Economy Minister Ľudovít Černák.
Žák responded that the ministry was contradicting itself. "The state hasn't yet acknowledged its minority partner, but did invite him to the shareholder's meeting." "I wouldn't call it schizophrenia," shot back Černák. "It's too strong an expression, because according to Transpetrol statutes, a majority of shareholders is required to make or approve a change [in the shareholder portfolio]."
Although the claim of the original company ILaS represented 65 million Sk ($1.8 million), the current market price of the 34.05% stake owned by minority shareholders, according to Finance Minister Brigita Schmögnerová, amounts to about two billion Sk. The disparity arises from the fact that the shares of Transpetrol were sold to C.S.I.-CD at 10% of their nominal value. "Nobody was able to offer more," said Žák.
Now that the state has taken the shares back, the seven minority shareholders are demanding two billion Sk in compensation instead of the 65 million Sk they spent. "Yes, it would be a great Christmas present," said Jozef Mach of the Finance Ministry press department, adding that "the companies should respect the law and not try to blackmail the government."
Mach, however, admitted that the state had been at fault in the Transpetrol case. "The fault was for sure on both sides," he said. The Finance Ministry's Surovič, on the other hand, pinned the blame mainly on the SCP Securities Register. "We discovered that the SCP had made a mistake, so we asked for a correction," explained Surovič.
Emília Palková, general director of the SCP, refused to talk to The Slovak Spectator, but released a short press release with an explanation of the SCP's role in the Transpetrol share transfer.
14. Dec 1998 at 0:00 | Slavomír Danko