Čtvrtek 28. března 2024, svátek má Soňa
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Lidovky.cz

Prague districts threatened as Key Investments collapses

  10:07

Three Prague districts that invested through the opaque brokerage Key Investments now look likely to be saddled with illiquid bonds

Vyvodí bývalý starosta Prahy 6 Tomáš Chalupa osobní odpovědnost za nezdařenou investici peněz městské části prostřednictvím firmy Key Investments? foto: © ČTK, ČESKÁ POZICEČeská pozice

For the Prague 6, 10, and 13 districts the chances of getting back their original cash investments and some profits from their investment in controversial investment company Key Investments now look like a distant prospect.

Key Investments on April 28 lost its license to trade in securities, a decision confirmed to Czech Position by the Czech National Bank (ČNB). According to bank documents, the reason was a change in the activities that Key Investments can legally carry out. In fact, a general meeting by Key Investments dropped shares trading as a company activity at the end of April. Prague 10, which placed  Kč 200 million with Key Investments, as well as Prague 6, and probably Prague 13, were informed of the change in letters last week.

For the councils concerned, this clearly puts at risk their original investments (totaling some Kč 600 million) and raises questions as to why their leaders embarked upon such risky ventures in the first place. Czech Position was keen to get the opinion of Prague 13, whose council discussed the issue last week, but neither the mayor, Milan Richter, or spokesman, Jan Charvát, picked up the phone. Prague 13 mayor David Vodrážka was also not answering calls on his mobile phone.

For Prague 6 and 10, the original agreements with Key Investments allows the brokerage to pay the city districts back with bonds from the Ústí nad Labem–based Via Chem Group and E Side Property, which is the owner of Slavia Prague football club’s Eden stadium. Prague 13 should get back Kč 150 million under its agreement. It is an open question as to which of the three Prague districts ODS politicians entrusted taxpayers money is now in a worse position.

It is an open question as to which of the three Prague districts where Civic Democrat (ODS) politicians entrusted taxpayers money is now in a worse position. Key Investments has for a long time been subject to distraint proceedings, so Prague 13 Mayor David Vodrážka (ODS) would have to steel himself to launch legal action if he wanted a chance of getting the Kč 150 million back.

Prague 6 appears to be even worse off in the cash recovery stakes. It originally placed the most money with Key Investments,  Kč 300 million in all, under the then-mayor and current Environment Minister Tomáš Chalupa (ODS). Key Investments bought bonds in the Via Chem Group  with most of Prague 6’s money and only invested Kč 50 million in E Side Property.

Prague 10 Mayor Milan Richter (ODS) is in the same boat with the difference that  Kč 200 million was invested in illiquid securities in Via Chem Group and E Side Property.

If they get their hands on the securities due to them, Prague 6 and 10 will almost certainly not be able to sell them on for anything close to what they paid. According to information received by Czech Position, Key Investments itself tried to offload the securities itself on banks and other institutional investors a fortnight ago without any positive results.

It looks like three options are left for Prague 6 and 10:

  1. Try to sell the Via Chem Group bonds, although the example of mining group Sokolovská Uhelná shows that such sales could get back just 10 percent of the initial investment.  Politicians would then be open to punishment for the 90 percent losses.
  2. Take Key Investments to court.
  3. Wait until the bonds reach maturity and should be paid.  Most of Via Chem Group bonds will mature in the fall of 2013 with those of E Side Property maturing in 2024.

In the case of E Side Property, a fourth possibility is open: capitalization. This would mean that the three districts become shareholders in E Side and the Slavia stadium. The question in this case is whether the political opposition on these councils would accept such a move.

Autor:

2. týden: Vyhrajte dobroty pro batolata v hodnotě 3 466 Kč
2. týden: Vyhrajte dobroty pro batolata v hodnotě 3 466 Kč

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