Another warning message for Key Investments’ clients

J&T group’s Poštová banka are buying Spolchemie’s loans from Czech banks; will a working firm be taken out of Via Chem Group?

 | na serveru Lidovky.cz | aktuální zprávy foto: © ČESKÁ POZICE, Petr UrbanČeská pozice
 | na serveru Lidovky.cz | aktuální zprávy

The Slovak Poštová banka, controlled by the financial group J&T, is buying up the loans of Spolek pro chemickou a hutní výrobu (Spolchemie) from Czech banks. These are short-term loans that financial institutions (Komerční banka, ČSOB, LBBW, Citibank, Raiffeisenbank and ČSOB) provided the chemical plant with.

This step is highly reminiscent of the situation concerning the sports betting firm Sazka, apart from the fact that Spolchemie is doing well and making a profit. Some banks have already sold the loans, the others are waiting. Poštová banka has reportedly bought about 55 percent of the loans, according to one Czech Position source.

The chemical plant is the most valuable undertaking of the parent company Via Chem Group, whose bonds for hundreds of millions of crowns were procured by Key Investments using money from city districts Prague 6 and Prague 10. So far, Poštová banka’s intentions with Spolchemie are unknown, but, according to the weekly Ekonom, an attempt to quickly arrest it from the asset structure of Via Chem Group cannot be ruled out.

Any transfer of Spolchemie’s property would significantly affect Via Chem Group’s creditors, i.e. Prague 6 and Prague 10, as well as the town of Sokolov and others, whose blithe politicians set off down the path of risky investment with Key Investments a few years ago.

Is PPF involved?

Last year Spolchemie, which the controversial businessman Peter Sisák (previously convicted for fraud) has a majority share in by means of Via Chem Group, made a profit of Kč 180 million. But at the end of 2011, the short-term bank loans totalled Kč 1.9 billion. The discount Poštová banka buys the loans for is not particularly relevant. At first the chairman of Spolchemie’s Supervisory Board, Martin Procházka, promised Czech Position an interview, but then cancelled the meeting and referred us to the company spokesman.

“I can confirm that Poštová banka is one of the official bank creditors of Spolchemie. At the moment, negotiations are underway on long-term cooperation and we will not disclose any further details until they are over,” Marie Logrová, Spolchemie’s spokeswoman told Czech Position. 

Poštová banka's headquarters in Bratislava reacted similarly. “Information concerning the bank’s clients, i.e. what you are inquiring about, is confidential by law. Likewise, we do not comment in advance on any of the bank’s business plans or decisions, nor on any speculations," the bank's spokeswoman, Eva Sagálová, told us. One high-ranking representative of the financial group J&T did tell Czech Position that it is a normal credit transaction.

However, one of Czech Position’s sources asserts that buying the debts is refinanced and controlled by a different financial group than J&T. Financier Miroslav Babej-Kmec, who has a court case with Petr Sisák over ownership of half of the shares in Via Chem Group, announced in the weekly Ekonom that, according to his information, PPF is behind the entire transaction. When we asked if this is the case, J&T merely reiterated that it is a credit transaction by Poštová banka and PPF has nothing to do with it.

Two possibilities

The creditor banks are to meet with the debtor in mid-June this year to discuss a new payment plan. Spolchemie’s financing is contractually guaranteed until the end of June, it is not in arrears. Yet Babej-Kmec believes that buying up the loans is an omen for taking Spolchemie out of the parent company’s structure. The businessman claims that in this transaction PPF is represented by the financier Karel Pražák. “I received information that, since the beginning of this year, Pražák has been negotiating with the banks to buy Spolchemie’s loans," says Babej-Kmec. Czech Position couldn’t obtain Pražák's opinion.

How could the chemical plant’s buy out pan out theoretically? If this is even planned, then there are two ways to bring it about:

  1. The first variant is a seizure led by Poštová banka with other banks joining in. In this case there would be nothing left for Spolchemie’s shareholders, especially Sisák.
  2. The second option is rapid insolvency proceedings supported by a strategic investor, who would quickly hire out the company by the end of proceedings, so as not to damage it, while Sisák and co. would get their's financially. The company would be sold by an insolvency administrator, who'd be appointed by the Court, but the Creditors Committee could repeal that at any time and propose its own person.

So if Poštová banka controls the Creditors Committee, it can decide on the sale of Spolchemie, and specify the competition parameters to the insolvency administrator. It could try to sell without an auction, which may come about if it controls the proceedings. The result may be that the chemical plant is sold in a controlled manner to a certain party, who only pays an amount upon which the parties have agreed. “The party pays the price to cover the debt, so Poštová banka will get its money back. If it bought the loans at a discount, it will be in profit. The chemical plant remains free of liabilities, with no shareholder issues,” Babej-Kmec claims.

Help for Peter Sisák

It’s true that Poštová banka has already helped Sisák once this year. It voted for Sisák as the creditor in January when Via Chem Group in Slovakia bought the bankrupt Novácké chemické závody for € 2.2 million. Moreover, according to Babej-Kmec, in the past, J&T funded the successors to Setuza, which Via Chem Group owned in a similar manner to Spolchemie. This was a special transaction that eventually led to property being transferred from STZ to Lisovna Ústí nad Labem.

Speculation on the possible transfer of Spolchemie from Via Chem Group's structures is categorically denied by the chemical plant.

“We’ve seen mendacious and speculative media reports on the possible insolvency of the company. I must emphatically state that the joint-stock company Spolchemie is not facing insolvency proceedings, not even theoretically. The company doesn’t meet any of the conditions for initiating them. This claim can be backed up by the audited results for 2011, which have been made public and which clearly demonstrate the company’s ability to make a profit and its financial stability. Likewise the company also duly pays its debts, and only last year, it paid the banks Kč420 million,” Logrová, the company’s spokeswoman, told Czech Position.

If, however, Spolchemie is sold due to insolvency or any other manner, according to Babej-Kmec, the only way to proceed further is arbitration against the Czech state, which was unable to protect foreign investment.

Prague 6 and 10 have been warned

The Via Chem Group is known from the Key Investments case. Using money from Prague 6 and Prague 10, it purchased Via Chem Group’s non-traded bonds for several hundred million crowns. At the end of 2011, the foreign company Calpit Consultants Corp., which belongs to Babej-Kmec, filed a lawsuit against Via Chem Group for compulsory liquidation by the court for not adhering to the basic obligations of the company. These concern not calling annual general meetings, not approving financial statements, not recognising the proposals of a shareholder with a 50% share in the share capital and voting rights, transferring assets without the consent of the general meeting and the like. If the financier Babej-Kmec’s predictions come true, bond holders in Via Chem Group, which are due in the fall of 2013, run the risk that investments in these securities may be fully written off.

According to Czech Position’s findings, coalition and opposition representatives of Prague 6 and Prague 10 were duly informed about the buy up of Spolchemie’s loans and the threat of removing the chemical plant from the structures of Via Chem Group. If the financier Babej-Kmec’s predictions come true, bond holders in Via Chem Group, which are due in the fall of 2013, run the risk that investments in these securities may be fully written off. We hope that Prague 6 mayor Marie Kousalíková (Civic Democrats, ODS) and Prague 10 mayor Milan Richter (ODS) have a legal advisor who is well versed in this issue.

The wizard of VV

The Czech public also knows of Spolchemie from the case of the Public Affairs MP Michal Babák. Last year the party’s “financial wizard” explained that the money he donated to Public Affairs, which he himself borrowed, will be obtained by selling shares or stock options in the auditing firm Bene Factum, which audits Spolchemie. To this day Bene Factum belongs to the entrepreneurs Petr Šrámek and Miloš Havránek.

Babák quantified his share in this company at 15 percent. He explained that he obtained these shares or stock options by helping Bene Factum to find a lucrative clientele, therefore significantly increasing its value. Revenues from the sale of options were estimated at 38 million crowns.

Last year MP Babák earned Kč 13 million. He paid Kč 1.5 million in tax on the sale of stock options in the audit company Bene Factum. However, to this day Babák refuses to explain how he got to these millions by means of the auditing firm Bene Factum. It cannot be ruled out that this was a reward for obtaining such clients as Spolchemie for Bene Factum.