PZU Zycie threatening legal action against Elektrim

PZU Zycie, the life insurance arm of Poland's biggest insurer, Powszechny Zaklad Ubezpieczen (PZU), is threatening to file for the bankruptcy of Elektrim, if the telecom and energy conglomerate does not buy back zl.200 million of its bonds. Last month Elektrim agreed to sell control of its telecom assets, including Poland's leading mobile telecom operator Polska Telefonia Cyfrowa (PTC), to Vivendi of France. PZU Zycie claims that the signing of this agreement gives it the right to demand an early buyback of the bonds, since the bond covenant was backed by a 3.3% stake in the E lektrim-Vivendi joint venture, Elektrim Telekomunikacja. "According to our agreement, in cases of changes of the collateral, Elektrim would buy back the bonds or change the collateral," a highly-placed PZU Zycie source told Reuters. The state-controlled insurer has given Elektrim 30 days to comply with its demands, and is threatening legal action if it fails to do so, which could mean filing for the company's bankruptcy. Elektrim management has expressed surprise at the threats. "We are stunned by PZU Zycie's position, especially since representatives of the two sides are still holding talks, and we were not aware that an agreement was not reachable," said Elektrim spokeswoman Ewa Bojar. (Gazeta Wyborcza, Sept. 29-30, p. 28; Reuters) T.J.