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BONDS CAN BE CONVERTED INTO COMPANY SHARES IN THREE YEARS

Shipbuilder to issue pair of 300 million, 5-year bonds

Slovak shipbuilder Slovenské Lodenice a.s. issued two 300 million crown (Sk) tranches of five-year bonds on September 19, one of which will be convertible into shares, the issue's manager, Tatra Banka a.s., announced on September 12.
The convertible bond issue, Slovenské Lodenice I, carries a zero-percent coupon, while the bonds are convertible into company shares after three years, Kamil Katrenič from the bond division at Tatra Banka said.
"The primary auction [of both issues] will be held in the form of a non-public sale to chosen investors, with priority claim for current shareholders," Katrenič said.

Slovak shipbuilder Slovenské Lodenice a.s. issued two 300 million crown (Sk) tranches of five-year bonds on September 19, one of which will be convertible into shares, the issue's manager, Tatra Banka a.s., announced on September 12.

The convertible bond issue, Slovenské Lodenice I, carries a zero-percent coupon, while the bonds are convertible into company shares after three years, Kamil Katrenič from the bond division at Tatra Banka said.

"The primary auction [of both issues] will be held in the form of a non-public sale to chosen investors, with priority claim for current shareholders," Katrenič said.

The news came days before Slovenské Lodenice officials held a press conference announcing that the firm expects to post a gross profit of 83 million Sk in 1997, after recording 11.2 million in 1996.

"Current trends in the sector and developments in our company indicate that we can keep increasing our profits to 100 million in 1998 and 128 million in 2002," Peter Hrin, the company's financial director, said on September 17. Lodenice posted a pre-tax profit of 32.1 million crowns for the first half of this year, after a loss of 34.8 million crowns in 1996.

Katrenič said that if a bondholder decided to convert the paper into shares, the issuer would pay the 15 percent tax on income from their yields. The yield, calculated according to the rise in share price, would therefore be net, he said. The papers from both issues will have a nominal value of 100,000 Sk and will be traded on the Bratislava Stock Exchange (BCPB). "In the beginning, we're asking only for registration of these bonds [on the BCPB]. Later, we will ask for them to be also listed," Katrenič said.

From September 2000, the convertible bonds may be exchanged for Slovenské Lodenice shares at the rate one to 100, or 100 shares at their nominal rate of 1,000 Sk for one bond, Katrenič said.

Currently, shares of Slovenské Lodenice are traded on the stock exchange at around 760-780 crowns. The Slovenské Lodenice II bond carries a fixed coupon of 15 percent per annum, paid annually.

The company announced that the funds from the issues would be used for restructuring the firm's current loan portfolio.

Slovenské Lodenice is Slovakia's sole ship builder. The plant is also the biggest inland ship builder in central and eastern Europe. According to management, the plant will complete 14 ships in 1997, with a death- weight tonnage ranging from 2,000 to 4,000 tons. In 1998, the company plans to build 11 ships, including the two with tonnage of 8,000 tons.

Company officials also said at the press conference that they were in talks with Bulgaria on the possible participation in the privatization of some Bulgarian shipmaking facilities. "Following a bid by the Bulgarian government, we are seriously negotiating our involvement in the privatization of large shipmaking facilities there," Slovenské Lodenice's general director, Milan Kopčok, said without elaborating.

Medical supplies' producer Chirana Prema is Lodenice's biggest shareholder, with a 22.8-percent stake. The second is the investment company PSIPS with 20.2 percent and the third is Danubia Invest investment company with a 16.6 percent stake.

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