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SLOVAK TELECOM FORBIDDEN TO GO BANKRUPT BY PARLIAMENT

Court to decide on contract

The state telephone monopoly Slovenské Telekomunikacie (ST) expected to sign a syndicate loan worth $100 million US over five years with the American Citibank by the end of October, ST spokesman +++ Stancel said October 5. But the situation may not look as wonderful as ST would like. Ivan Matušik, a private businessman has accused ST of breaking a contract that secured him the exclusive right to publish phone directories. He is all set to make ST's credit look bad in the eyes of Citibank. "ST is not a reliable business partner, they do not keep the contracts they sign,'' Matušik said. şşHow can the bankers be sure they will get all their money back?''


Thumped. Parliament passed a law prohibiting strategic state companies from declaring bankruptcy, thus foiling Jozef Majský's attempt to gain partial ownership of Slovak Telecom.
Ján Kurchta

The state telephone monopoly Slovenské Telekomunikacie (ST) expected to sign a syndicate loan worth $100 million US over five years with the American Citibank by the end of October, ST spokesman +++ Stancel said October 5.

But the situation may not look as wonderful as ST would like. Ivan Matušik, a private businessman has accused ST of breaking a contract that secured him the exclusive right to publish phone directories. He is all set to make ST's credit look bad in the eyes of Citibank. "ST is not a reliable business partner, they do not keep the contracts they sign,'' Matušik said. şşHow can the bankers be sure they will get all their money back?''

Late September, Matušik's lawyers contacted Citibank Citibank International and handed over legal documents showing that ST has been sued for a whopping fine worth over 10,000 billion Sk. A Citibank official who requested anonymity said that a Coopers & Lybrand audit of ST in 1995, provided this year when ST was negotiating the loan, did not include any information about ST's debts."We certainly will pay attention to the outstanding litigation,'' the Citibank official said. "Everyone is taking a fresh look at it now."

He said Citibank will rely on the auditor's view for the litigation's possible impact. The prospective syndicate loaners will get the "overall story on the credit of the company,'' the Citibank representative said.

Legit or not

Matušík's firm Herold Business Data Slovakia s.r.o. (HBD), signed a contract to have an exclusive right to print phone books for ST customers back in 1990 that was later amended in 1992. A clause defining severe sanctions for not upholding the deal was added, amounting to a 500 Sk fine per day, with that figure quintupling every three months it was not paid.

Matušík said ST introduced the clause, "probably to get us, if we didn't deliver the phone books on time.'' However, it was Matušík who ended up using the clause. Not providing computer data as agreed in the contract, and cooperating with HBD's competition, ST violated the original agreement starting in June 1993, according to Matušík.

He said ST refused to answer his complaints until 1995. Then ST's lawyer, Milan Škultéty, met Matušík only to tell him ST did not consider the agreement with HBD valid. Matušík decided to invoke the fine.

Court games

In January 1996, when the alleged debt - then worth over 500 billion Sk - exceeded ST's equity capital, the district court in Bratislava stated that a board of creditors would supervise and approve ST's activities until the debts were paid back. Otherwise, the company would go bankrupt.

But ST ignored the ruling, claiming the contract with Matušík's company was never valid. In May, another district court in Bratislava ruled after a one-day session that HBD's contract with ST was invalid. Matušík appealed to a higher court. He is certain he will win "if the judge is good and respects the law."

Matušík insists that the contract was valid, citing the fact that he created five phone books under the agreement. In the August 1994 edition of the Bratislava phone book, ST division director Jozef Šmatlák and Ján Benka, HBD's director, signed this statement:

"This directory is a significant move of the publisher [HBD], introducing a new project of phone directory publishing in the Slovak Republic that aims to provide the public with high quality information and media to advertise.''

Despite the exorbitant sum being contended, Matušík insisted he is not after the money. "I don't care if I get the fine. I know it would be an absurd amount of money," he said adding that he would be satisfied if ST officials would just "go out and have a beer and settle the problem like normal people.'' "I just want to print phone books. I like this business,'' Matušík said.

New player

In April, Matušík sold 112 million of ST's alleged debt to Jozef Majský, one of Slovakia's richest businesspeople, and a an archenemy of Prime Minister Vladimír Mečiar. Majský is bold about his plans - capitalizing on his assets, he wants to become a co-owner of ST.

However, to achieve that, he would need approval from the government because ST is a state-owned company. On August 20, the government denied Majský's request to start bankruptcy proceedings against ST.

Coalition deputies then boldly pushed through an amendment to the bankruptcy law in Parliament that excludes all strategic state companies, including ST, from bankruptcy, thus protecting ST from Majský or other creditors. Coalition deputies admitted the move was to keep Majský from becoming an ST co-owner.

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