Janczyk: now everything is for sale
Elektrim's new CEO, in the post for less than a month, sealed a long-awaited €510 million debt restructuring deal by simply "not playing games," he told the Business Journal.
"My approach was to open all books, tell the truth and to jointly find a solution no matter how bad the news was," he said.
His strategy produced a deal lauded even by sanguine market watchers, initially because both parties were satisfied, but also because previous management teams had left unhappy bondholders on tenterhooks.
"They made a mistake not opening up to the real condition of the company," Janczyk said.
The former management, headed by president Maciej Radziwiłł filed for bankruptcy on Sept. 13. It had been unable to move beyond an agreement to pay bondholders a hefty €200 million this year. Radziwiłł based the raising of that sum on sale of Elektrim Telekomunikacja (ET) and energy company Patnow-Adamow-Konin (PAK) - when the market in telecom assets was gripped by global freezing.
"The other management was negotiating on the basis of putting proposals on the table, without really explaining what the company needed to do to get the money," Janczyk said. "And that's sometimes a fair tactic, that you don't have to show everything."
Janczyk, who is the former head of corporate finance at Elektrim's largest shareholder, BRE Bank, and briefly a minister in Leszek Miller's government, was named CEO on the heels of Radziwiłł's bankruptcy filing.
"I could only put my hands up and say, 'Look, here's how I find the outlook of the company. You look at it as well and be reasonable because if we are not reasonable then we all fail,' " he said.
The forthright approach worked.
The Warsaw District Court scheduled a hearing for Oct. 7. It never happened. Janczyk inked the bondholder agreement and withdrew the filing on Oct. 4. Janczyk's bargaining has, he hopes, successfully anchored the company's operations at least until 2005.
The final deal dramatically shrinks the amount of upfront payments the company would pay on the €510 million it owes to convertible bondholders, which was the major hurdle that negotiators could not surmount. The revived conglomerate made a commitment to pay €453 of the convertible debt by Dec. 15, 2005. And it is committed to make only €25 million in initial payments upfront plus an additional €32 million tranche due in June 2003.
The final agreement is pending on a November bondholder meeting, but Janczyk said the company already has more than the required 75% of bonds committed in writing to the deal.
To repay bondholders, Elektrim is entertaining several scenarios.
The most likely approach, according to potential investors and management alike, has Elektrim selling its 49% stake in ET, which owns 51% of Polska Telefonia Cyfrowa (PTC), the operator of Era GSM mobile network. Janczyk said today that he would accept €450 million for the stake, but he noted that since his arrival he has had no offers.
Otherwise, said Janczyk, everything is up for sale: PAK, Elektrim Megadex, Elektrim Volt and Rafako as well as its property holdings, confirming the Business Journal's prediction in our edition last week that reported the 11th hour rescue and forecast a "sum of the parts" auction of the business.
