Struggling Elektrim unsnared at eleventh hour
Investors sent the shares up 33% to zł. 2.74 on the news, which is expected to presage a "sum of the parts" breakup of the business.
But is it a victory - or just another stage act in what has been billed as Poland's longest running private sector corporate tragedy?
Few observers had rated Janczyk's chances of pulling back the bankruptcy filing which was due to reach a bondholders' hearing in a Warsaw court this week.
"Elektrim was the real story of the index," said Marcin Materna, an analyst at BIG Bank Gdański.
Collapse in confidence
Last December, Elektrim defaulted on €480 million worth of bonds, triggering a total collapse of confidence in the company. In January this year, angry bondholders filed a petition for bankruptcy. The company was ordered by a Warsaw court to begin debt restructuring proceedings and recently reached an agreement with the bondholders, only to pull back from the deal. In recent weeks, market analysts had been urging the Elektrim board to throw in the towel.
Janczyk, formerly with BRE Bank, was hired as a troubleshooter to pull Elektrim back from bankruptcy shortly after he resigned his post as a privatization and special projects expert at the Ministry of Infrastructure.
Shares yo-yo
The market refreshed Elektrim shares on the news because it sees potential value in accessing the company's telecom assets, currently circled by a number of predators. Elektrim has a 49% stake in Elektrim Telekomunikacja (ET), which in turn has 51% slice of Polska Telefonia Cyfrowa (PTC), Poland's number one mobile operator. ET is a joint venture with French multinational Vivendi Universal, but a wrestling match between Elektrim and Deutsche Telecom over PTC's ownership structure has been going on for the past three years.
Not everyone in Warsaw popped champagne at the news.
An analyst at one of the major banks in the city poured water on hopes that Elektrim was free from bankruptcy.
"I think the firm is still headed there, and this is certainly not a stock which we would recommend to our investors," said Andrzej Kasperek, a sector analyst at Bank Handlowy. He added that he saw Janczyk's success as little more than buying time.
BRE's biggest headache
The problems at Elektrim have proved a serious headache for the major stockholder BRE Bank, holding almost a fifth of the equity, which had itself contemplated a bid for the telecoms plums in the business. A group of Elektrim bondholders are still warm with a €1.3 billion offer for the entire PTC business, so long as it is unencumbered by either debt or the complications of bankruptcy proceedings.
The German telecom giant seems to have a considerable appetite for continuing the struggle for PTC and has taken a legal avenue intended to find Elektrim constitutionally unable to continue, which if successful, might offer the prospect of a bargain basement purchase.
The glory days when Elektrim looked as though it would rank as a national champion have long faded. Its present market cap of approximately €56 million is a long haul down from the €1.53 billion the company reached at the height of the telecoms mania years ago. The share price topped zł. 75 in March 200l, and in September this year reached virtual floor level at zł. 1.2.
Janczyk's next move must be to convince markets and players that he has a strategy for a company which is left with hardly a shred of credibility. It's thought that he will receive strong backing from the company's vice president Ryszard Opera, holder of almost 10% of the firm's stock, who was recently elevated to the management board, in moving for asset sell-offs. Elektrim now plans to issue short bonds valued at €510 million to generate short- to medium-term liquidity, so long as three quarters of the existing bondholders agree.
