Negotiations on Galenika face troublespot - Debt to commercial debts questionable

Negotiations on Galenika faced dead end and they have not even started yet in the true sense of the word, Blic learns.

British-Russian Consortium Frontier – Farma Petrovax - Farm, which began negotiations with the government with respect to acquisition of 33% of our largest pharmaceutical company, could very easily give up on a strategic partnership which the state sees as saving solution.

Namely, trouble spot is Galenika's debt to commercial banks, which amounts to about EUR 70 m and which has been stockpiled for years. Since a strategic partner does not want to take these claims and loans are due for payment December 1. At the same time, in contact with banks there has not been provided any firmer promise that they will be ready to prolong funds return in longer period of time. As reported by respondents of Blic, it could be said that banks reported completely different intentions and want to get their money back as soon as possible because they are not sure what will happen next with Galenika.

If the consortium gives up on strategic partnerships, Galenika should file for bankruptcy, so the company's management tried to solve this by reducing costs in order to collect money for due loan installments.

At the meeting with trade unions, as Blic managed to find out, management proposed that framework of the "cuts" should also comprise salary cuts not linearly, but from 5 to 25%, depending on performance and that this is determined by sector managers. Trade unions strongly opposed, and this story has been on halt for the moment.

On the other hand, some of collocutors of Blic also directly or indirectly are involved in the negotiations on the strategic partnership, showed a bit more optimism about the final outcome.

The state is preparing Plan B as well

As Blic learns, if negotiations of the Government and the consortium over the sale of Galenika fail, Plan B will be implemented. It means that the government will write off company’s debts to state creditors. There remains, however, once again the question of what will happen with debts of Zemun-based factory to private banks.

Galenika a.d. Beograd

Frontier

Farm Petrovax

Petrovaks

privatization of Galenika

negotiations on strategic partnership with Galenika