FNM stages giveaway

The state privatization agency, the National Property Fund (FNM), transferred from its portfolio on October 30 a 42% stake in DMD Holding, which is a major shareholder in all large engineering companies in Slovakia. The new largest shareholder in DMD Holding is its subsidiary, DMD Progress.
The sale was in effect a privatization move, because the FNM stake in DMD Holding dropped from 60.7% to 18.8%. The ownership changes came only one day before the government of Premier Vladimír Mečiar formally resigned and the newly elected Parliament held its inaugural session. "This was a political sale," said Viktor Levkanič, an analyst with brokers Slavia Capital. "It was done in accordance with the political ideas of the FNM."

The state privatization agency, the National Property Fund (FNM), transferred from its portfolio on October 30 a 42% stake in DMD Holding, which is a major shareholder in all large engineering companies in Slovakia. The new largest shareholder in DMD Holding is its subsidiary, DMD Progress.

The sale was in effect a privatization move, because the FNM stake in DMD Holding dropped from 60.7% to 18.8%. The ownership changes came only one day before the government of Premier Vladimír Mečiar formally resigned and the newly elected Parliament held its inaugural session. "This was a political sale," said Viktor Levkanič, an analyst with brokers Slavia Capital. "It was done in accordance with the political ideas of the FNM."

The transfer took place at about 11:30 on October 29 through the Central Securities Register. Subsequently, at 12:00, the Finance Ministry ordered a halt to all transfers through the Register, which was effectively an early end to share trading.

The agency said the transaction was associated with a financial claim heldby DMD Holding on the FNM amounting to 1.6 billion Sk ($44 million). DMD Holding transferred this claim to its subsidiary DMD Progress, which collected a 42% stake in DMD Holding from the FNM in payment for the claim. The actual value of the transferred package, however, is well over 2 billion Sk.

Following the sale, several interesting share transfers from the FNM portfolio took place on the Bratislava Stock Exchange on October 30. The buyer in all instances was DMD Holding. The FNM sold its minority stakes in eight engineering companies, such as TOS Jasova, ZOS Zvolen, ZOS Trnava, Stredoslovenske strojarne Vyhne, Strojarne potravinarskeho priemyslu Bratislava, Strojmonta, and PPS Detva.

At the beginning of 1998, DMD controlled 20 large Slovak engineering companies with cumulative revenues of 11.7 billion Sk ($325 million) in 1997.

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