The dodgy brokerage Key Investments has lost its license, and proven a nightmare for Prague districts that entrusted their money to it
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.
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:
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.
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.
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.