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TMCNet:  COMPANIES AND INDUSTRIES [IntelliNews - Weekly Reports]

[February 22, 2013]

COMPANIES AND INDUSTRIES [IntelliNews - Weekly Reports]

(IntelliNews - Weekly Reports Via Acquire Media NewsEdge) COMPANIES AND INDUSTRIESSerbia extends deadline of tender for strategic partner of drug maker Galenika.

Serbia has extended the deadline for sending letters of interest in a strategic partnership drug maker Galenika to April 1 from March 19, the finance ministry said on Feb 19. Interested bidders can apply for participation in the procedure by March 4 and have access to company documentation and premises until March 29. The government launched the procedure in mid-January, inviting companies who have been active in the pharmaceutical industry in the past five years and generated revenue of over EUR 200mn in 2011 to participate.



Serbia plans to first explore the potential interest in the sale of Galenika and ask potential investors to propose the privatisation model themselves. Once it reviews all offers, the government will choose the best model.

According to earlier media reports, two companies have already indicated they might take part in the privatisation - Canada's Valeant Pharmaceuticals and an unnamed German firm.

Serbia made an unsuccessful attempt to sell Galenika three years ago when it opened at end-2009 a pre-qualification tender, seeking EUR 200mn for its largest drug firm. However, the companies that expressed interest in the sale said they were ready to pay no more than half of the asked amount and a result Serbia cancelled the sales procedure. In the beginning of 2012, Serbia extended state guarantees for a EUR 70mn loan Galenika withdrew from four banks to refinance short-term liabilities. According to latest available information on its website, Galenika turned to a net loss of RSD 1.4bn (EUR 12.4mn) in 2010 from a RSD 674mn net profit in 2009.

IFC lends Serbia's Victoria Group USD 75mn to expand business activities.

The World Bank's private sector arm - the IFC, is providing a USD 75mn loan to Serbian agro-industrial company Victoria Group to finance its business expansion and strengthen its finances, the company said in a statement on Thursday, Feb 21. The funds are extended for a six-year period and will be used to refinance existing loans and increase Victoria Group's working capital base, the statement said. The loan will also help developing Serbia's agriculture sector, which contributes 15% of GDP and makes up 10% of the country's exports.

Victoria Group was set up in 2001 and today employs over 1,800 people in ten companies. It is the majority owner of soybean producer Sojaprotein, biodiesel manufacturer Victoria Oil, fodder producer Veterinarski Zavod and Novi Sad-based Viktoria Logistic. The group is considered to be the largest single buyer of wheat and maize in Serbia, as well as the country's larger grain exporter.

Russia's UVZ might give up plans to buy Serb steel mill - report Russian state-owned machine-building company Uralvagonzavod (UVZ) might give up its plans to buy Serbian steel mill Zelezara Smederevo but instead try to set up a joint venture firm with the Serbian government similar to the model of Fiat's production in Kragujevac, daily Blic reported, quoting unofficial information. UVZ, which was the sole bidder in last year's tender for the sale of Zelezara, was expected to file an offer with the government by mid-Feb. According to the unofficial information, however, the offer has not been prepared yet and more details will be announced at the end of the month.

The latest unofficial information from Moscow suggests that UVZ has given up the idea to become a 100% owner of Zelezara – a former unit of US Steel. Instead, an analysis of the Russian company shows it would be much better if the Serbian state signs a deal with UVZ to set up a separate joint venture firm – in line with the model of Fiat Automobili Srbije (FAS). FAS, a 77/33 joint venture of Italy's Fiat and the Serb government, revived Serbia's automobile manufacturing industry, dominated in the past by car maker Zastava. Anonymous sources from the Serbian government confirmed such an idea was mentioned during past meetings between the two parties but there has been no official talk on the proposal.

Production at Zelezara has been cut to minimum. One of its two ballast furnaces was shut down and the other is in hibernation. Its 5,000 worker have been sent on holiday, receiving only 60% of their average income.

The Serb state bought back Zelezara from US Steel for a token price of USD 1 at end-Jan 2012 but has halted its production since July 2012 because the company was unable to cope with the unfavourable global market prices and the lack of raw materials. If Serbia manages to soon complete the sale of Zelezara and restart its production, this would have a significant positive impact on the country's economic performance since Zelezara has a 12% share in Serbia's exports and accounts for 5% of the country's industrial output.

Carrefour to open first shop in Serbia in 2015 – Delta Real Estate.

France's Carrefour, one of the leading retailers in the world, will open its first shop in Serbia in 2015 inside the Delta Planet shopping mall in the capital Belgrade, Serbia's Delta Real Estate said in a statement last week. The Serb company said it has signed a leasing contract with Carrefour for a 10,000 square metres location with the future mall, which will also open doors in 2015. Delta Real Estate said this is only the beginning of its cooperation with the French retailer and the two have agreed to extend their partnership to other locations as well.

Another big retail chain entered Serbia almost two years ago - Belgium's Delhaize Group, after acquiring retailer Delta Maxi for EUR 932.5mn in July 2011 from the Delta Holding of Serbian tycoon Miroslav Miskovic. Delta Real Estate is also part of Delta Holding.

Serbia signs deal with Italy's Leitner on EUR 25mn tourism project.

Serbia has signed a memorandum of understanding with Italy's Leitner on a EUR 25mn public-private partnership project for building a gondola lift and other facilities in the mountainous ski resort of Kopaonik in central Serbia, the finance ministry said in a statement. The EUR 15mn gondola lift will connect the village of Brzece with Kopaonik. The project also includes the construction of a new chair lift, installation of artificial snow equipment and additional ski runs. This will be Serbia's first major public-private partnership in the field of tourism, finance minister Mladjan Dinkic was quoted as saying in the statement. He added that tourism in Serbia generates around USD 1bn worth of revenue annually. The Kopaonik centre has more than 50-km of ski runs for alpine skiing and 12-km runs for Nordic skiing. All ski runs are connected with a system of 24 chair lifts and the whole centre is equipped with artificial snow facilities.

Serbia's Yugoimport signs military deal with UAE's EARTH Serbian state-owned arms trader Yugoimport SDPR signed a contract on Monday, Feb 19, with Emirates Advanced Research and Technology Holding (EARTH) to jointly develop and equip rocket system ALAS, the Serb government said in a statement. The deal was signed in Abu Dhabi and was attended by Serb deputy PM and defence minister Aleksandar Vucic. The statement said that the joint development of the ALAS missile system defines a new generation of missile systems and missiles of similar and greater range. It is preceding an agreement on a joint production and delivery of large quantities of rockets, missiles and systems components. The deal is essential for the Serb missile industry and domestic factories like Krusik, Teleoptik and UTVA. The value of the contract was not disclosed.

Serbia opens tender for small hydropower plants on 317 locations.

Serbia has invited interested parties to take part in a tender for the development of small hydropower plants on 317 locations across the country, the energy ministry said in a tender notice on Feb 19. Investors could apply for permits by April 5. Most of the plans will be of capacity smaller than 1 MW. Seven days after the list of potential investors is published, the three parties – the investor, the energy ministry and the local municipality, will sign memorandums of understanding on each location. The memorandum will define a six-month period, within which the investor should launch the procedure to receive the necessary energy permits.

Serbia's NIS interested in Bosnian fuel retailer Krajinapetrol Serbian energy firm and Petrobart Limited Gibraltar have asked for a postponement of the bourse auction for a 45% stake in Bosnian fuel retailer Krajinapetrol in order to gain more time and adequately prepare for the sale, news service eKapija informed, quoting reports in Bosnian media. Bosnia's Serb Republic Investment-Development Bank (IRB) has announced it will offer the government's 45% stake in Krajinapetrol on the Banja Luka bourse, seeking to raise an overall BAM 9.2mn (EUR 4.7mn).

The head of IRB, Snezana Vujnic confirmed the interest of NIS and Petrobart, saying they could not meet their demand since the auction was already scheduled for Feb 19-21. Vujnic said she was informed that NIS is already gathering data about Krajinapetrol but the Serbian company needed more time for its executives to take the necessary decision for the purchase.

IRB is ready to repeat the action at the same conditions within a month if the current sale fails. A total of 6,316,286 Krajinapetrol shares will be auctioned at a starting price of BAM 1.46 each. According to Krajinapetrol's website, among its other significant shareholders are Petrobart Limited Gibraltar with 25.3% and Croatia's INA with 9.7%. The Bosnian company's latest available financial statement showed it turned to a BAM 279,000 loss in 2011 from a BAM 56,100 profit in 2010.

Telenor considers acquisition in Croatia via Serbian unit – report.

Norway's Telenor via its Serbian subsidiary is allegedly considering taking over the Croatian unit of Swedish telecom Tele2, Croatian daily Vecernji List reported, quoting unnamed sources. According to the report, the big telecom firms (one of which Telenor) are carrying out due diligence at Croatia's third largest mobile operator – Tele2 Hrvatska. The due diligence process is allegedly going to be completed very soon and most likely will result in Telenor Serbia acquiring its Croatian peer.

Tele2 has been present in Croatia since 2005 as the youngest telecom in the country after T-HT controlled by Deutsche Telekom and the Vipnet unit of Telekom Austria. Tele2 Hrvatska posted a 23.1% drop in its 2012 EBITDA to SEK 60mn (EUR 7mn), while its EBIT last year was a negative SEK 65mn, up from a negative SEK 42mn in 2011.

In Serbia, Telenor became the biggest mobile operator in terms of revenue for a first time since entering the country in 2011, surpassing incumbent Telekom Srbija. Norway's Telenor said earlier this month that the operating profit of Telenor Serbia rose 17.7% to NOK 733mn (EUR 99mn) in 2012 but its EBITDA before other items, fell 11% to NOK 1.1bn, while its total revenue declined 6% to NOK 2.7bn last year. Telenor entered Serbia in July 2006 when it bought existing mobile operator Mobi 063 for EUR 1.5bn.

Serbia's software exports worth EUR 300mn in 2012.

Serbia's software exports totalled EUR 300mn in 2012 and are expected to rise considerably in the following years thanks to the government's new programme to support the sector, finance and economy minister Mladjan Dinkic was quoted as saying in a ministry statement. He was speaking at a conference on the promotion of the country's software and IT industry held in the northern city of Novi Sad earlier this week. Dinkic said that investments in the sector remain particularly small even though it offers great potential for future benefits. He added the development of the IT industry will contribute to an increase of the country's exports and stop the brain-drain from Serbia.

The government is currently preparing an IT-sector support programme that includes four main groups of measures - tax benefits, subsidies for start-ups worth up to EUR 25,000, adapting the education system to the needs of the IT industry and various types of support to Serbia-based software exporters. The programme should be activated in March, when the legal framework for its launch is expected to be adopted.

Serbia's IT market shrank 3% to EUR 400mn in terms of revenue last year and remains well below the record high market value of EUR 545mn achieved prior to the crisis in 2008.

Serbia's Jat Airways targets servicing 11% more passengers in 2013.

Serbian national air carrier Jat Airlines plans to transport 1.5 million passengers in 2013, up 11% compared to last year, its director general Vladimir Ognjenovic said. Jat plans servicing 33 destinations and executing 245 flights after raising the number of flights to Croatia (Dubrovnik, Split and Pula) this year, Ognjenovic was quoted as saying in a statement of the transport ministry. The airliner transported 1.24 million passengers in 2012 and 1.1 million in 2011. Ognjenovic also said it is realistic to expect that Jat will break even this year thanks to the anticipated state support in purchasing new planes.

The government is trying to restructure Jat and make it a profitable company again via renewing its fleet and stripping it off mounting debts. Ognjenovic said that at present Jat's debt totals EUR 170mn, adding the state is not subsidising the company. He added that four Airbus A320 planes should be bought in 2015 and two ATR 72-500 carriers in 2016 and 2017.

Finance minister Mladjan Dinkic said earlier this month that the flag carrier of the United Arab Emirates - Etihad Airways, is considering the possibility of taking over Jat Airlines. Ognjenovic confirmed Etihad is currently analysing a potential strategic partnership with Jat.

Belgrade's Nikola Tesla Airport handles 2% less passengers in Jan 2013.

Belgrade's Nikola Tesla Airport said it handled a total of 210,050 passengers in Jan, down 2% on the year. The number of aircraft operations also dropped - by 6% y/y to 3,108 in Jan, the airport operator said on its website. In 2012, passenger numbers climbed 7.7% to 3.36 million, mainly due to a strong growth in the first four months of the year. The volume of cargo shrank 10% to 7,253 tonnes in 2012, while the number of aircraft operations remained broadly unchanged at 44,990. Serbia's largest airport has said its net profit shrank 38% to RSD 1.1bn in the first nine months of 2012, according to latest available data.

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