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SALES OF SLOVAKIA'S REGIONAL BUS COMPANIES CONTINUE, BUT DEAL FALLS THROUGH IN CAPITAL

Bratislava bus buyer balks

AS THE country moves forward with the privatisation of its 17 regional bus carriers, the buyer of the largest has backed out of the deal, saying Slovakia's FNM privatisation agency has not met contract conditions.
The French-Swedish Connex group, a subsidiary of the Vivendi conglomerate and Europe's largest private bus company, in March won a tender for a 49 per cent stake in Slovenská autobusová doprava (SAD) Bratislava, with an option to buy an additional 17 per cent stake.
However, in early December Connex confirmed it would not go ahead with the purchase, citing the FNM's unwillingness to discuss how or when the company would gain its majority control as one reason why.


WITH THE departure of Connex, SAD Bratislava may be returned to the Slovak Economy Ministry.
photo: File photo

AS THE country moves forward with the privatisation of its 17 regional bus carriers, the buyer of the largest has backed out of the deal, saying Slovakia's FNM privatisation agency has not met contract conditions.

The French-Swedish Connex group, a subsidiary of the Vivendi conglomerate and Europe's largest private bus company, in March won a tender for a 49 per cent stake in Slovenská autobusová doprava (SAD) Bratislava, with an option to buy an additional 17 per cent stake.

However, in early December Connex confirmed it would not go ahead with the purchase, citing the FNM's unwillingness to discuss how or when the company would gain its majority control as one reason why.

In addition, Connex has complained that changes in SAD Bratislava's corporate statutes from September would not give it as strong a control over the company as it would like.

"We have definitely decided that we will not sign the contract," said Cyril-Herve Carniel, Connex director for the Czech Republic, Slovakia and Hungary, after a late November deadline had passed.

"Connex was not given a chance to do due diligence in the company. Moreover, a general meeting on September 3 changed the company's statutes in a way that [would have] endangered company control if Connex had managed to acquire a majority on the board of directors," he said.

The changes to the statute gave the state a guaranteed level of representation on the board of directors.

Officials from the FNM, however, contend that contract conditions had already been agreed upon, and that the agency is unable to change them without a government decision.

The officials also said that the departure of Connex, whose Sk540 million ($13 million) bid for SAD Bratislava is one-third of the total price for all 17 SADs, will not affect other bus company sales, and that a number of contracts had already been signed.

"The privatisation conditions are standard for all the SADs, and were made clear beforehand. The entry of investors has already been closed in 10 operations, and nobody, other than Connex, has had any reservations," said FNM spokesperson Tatjana Lesajová.

The core of Connex's complaint, explained Carniel, is that a planned share capital increase in SAD Bratislava would mean their option would only represent an additional 8 per cent of the company rather than the 17 per cent they had agreed to.

"Even if we were to pay the initial Sk540 million, we wouldn't be getting a majority, which is what we offered our money for, and we would still not be fully directing the company," said Carniel.

Connex also complained that the FNM had been unwilling to discuss the issue or to clarify terms and timetables for majority control.

"In negotiations, there have to be two. In the place of that, we had to bring forward our proposal without discussion," said Carniel.

However, FNM officials counter that they had received and assessed Connex's complaints, but were powerless to change government directives under which the deal was carried out.

"The FNM can only proceed in line with the government resolution and has no power to change it," said Lesajová.

"If [Connex] does not sign the contract, we will have to return it to the [Economy] Ministry. Afterwards, it will be under the ministry's authority, which may reassess the percentage [of the company] to be sold or it may cancel the competition as unsuccessful," she said.

Lesajová also said that the changes in SAD Bratislava's board were standard for all the bus companies prior to their privatisations.

"It is important to maintain the position of the state in public transportation through a member on the board of directors," said Lesajová.

The Slovak state has already signed contracts on 10 regional bus companies, and four more contracts have been prepared or are in the final stages of preparation.

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