Sazka management on March 14 asked the interim insolvency trustee Josef Cupka if they could temporarily halt lottery activities. “I don’t agree because this step would dramatically lower Sazka’s value. If Sazka stops the lottery, even if just temporarily, then it will lose its main asset,” Cupka responded.
The lottery firm’s extraordinary general meeting also rejected a proposal to change the statutes and fire the current management. Sazka asked for a halt to its activities until the insolvency court allows the company to sign a contract on a loan and cooperation between Sazka and the firm Gladiolus, backed by Martin Ulčák’s E-Invest and the financial group Penta Investments, according to a press release. Last week, the court decided, based on the proposed contract, to impose interim measures restricting Sazka’s handling of its assets without prior agreement by Cupka.
The request was “in order to prevent the occurrence of other liabilities and subsequent damage until the decision on credit agreement and cooperation agreement is delivered,” according to Sazka.
‘If Sazka stops the lottery, even if just temporarily, then it will lose its main asset.’
The reason for the contracts is to ensure sufficient financial resources, to bridge the fall in liquidity and end the insolvency proceedings. Sazka further stated that for now it will only pay out wins of up to Kč 500,000.
January’s winner of almost Kč 104 million is still waiting for the prize, even though the interim insolvency trustee has approved the payment. The question is whether Sazka has the money to pay this bonus jackpot and, if not, why. According to the gambling plan approved by the Finance Ministry, the financial resources for prizes should be accumulated from the unsuccessful bets in previous draws.
The operators of Sazka’s terminals could also cause a momentary break in cash flow. According to some gambling experts, it is quite normal for the operators to give the company deposits, which can be in the tens of millions of crowns. This is quite logically because they receive the stakes and Sazka needs to be sure that it won’t lose its money. The proposal for starting insolvency proceedings could make terminal operators worry about the fate of these deposits, so it is possible that they will refrain from paying Sazka the money taken from gamblers. This would stop the lottery giant’s liquidity.
Sazka stated in the press release that winners of higher amounts are protected by the principal kept at the Finance Ministry. So far, Sazka has not asked to use the principal. “A situation like this has never happened before,” Karel Korynta, the ministry’s head of state supervision of lotteries, told Czech Position.
Hušák stays
Sazka also held an extraordinary general meeting called by the smaller shareholders – the Czech Olympic Committee (2 percent); the Association of the Sport Federations of the Czech Republic (3.56 percent); and the physical education organization Orel (0.88 percent). They voted to amend the statutes allowing a strategic partner to step in, and to dismiss the current management headed by the general director Aleš Hušák. These proposals were rejected. Both the Czech Association of Physical Education (ČSTV), which is Sazka’s majority shareholder with 68 percent, and some of the smaller shareholders voted against them, according to the Czech News Agency (ČTK).
