Telecoms needs foreign investment
Russia may want to keep Poland out of the European Union but its entry can also be thwarted by its own lack of essential "market" infrastructure that would enable it to hold its own with the other EU members. That means telephones, modern highways, power plants and the like.
And, if it was said once it was said a dozen times, it will cost more than $7 billion for Poland to double the five million telephone lines it has today, when less than 12 out of every 100 Poles have access to telephones (and that drops sharply to three per 100 in rural areas). Poland's monopoly telecom service, TPSA, may be stepping up its efforts to expand service, but it can never come up with the money required to wire the country.
That means, say both the Poles and the outsiders, that Western telecom giants need to be let in as "partners" to help finance the regional development of basic telephone service. Others at the conference were pushing TPSA to consider letting outsiders share the "backbone" or interconnect system which is a big profit center for TPSA and is essential in tying together the disparate networks of public and private systems in Poland.
The bottom line message: it is in Poland's national security interest to get a modern telecom system in place as soon as possible and that can only be done if outside financing is let in the door. Soon.
* * * *
In London, interest appears to be high in the latest two loan syndications to finance two medium-sized container ships at the Gdynia shipyard. The first consortium is dominated by Polish banks and is led by Bank Rozwoju Exportu (BRE). The second is another syndication led by Citibank, which did the first deal for the Gdynia shipyard last November. The Euromarket syndication, led by Citibank London has been dubbed as "Gdynia Two" and will go a long way to relieving the shipyard's cash-flow problems that have been pervasive since the fall of communism - and enable it to fill the orders that are coming in. It has been using the debt-for-equity provisions under a 1993 law to get rid of its debts, which then frees it up to qualify for new capital from the outside.
* * * *
At a bankruptcy conference sponsored by Deloitte & Touche last spring, analysts said the 1993 law providing for bank and enterprise debt writedowns or debt-for-equity swaps had become the principal vehicle for bankruptcies. That wasn't the purpose, but the prewar bankruptcy laws have proved too inflexible to handle the complexities of today's financially troubled enterprises.
* * * *
The architect of the law, meanwhile, is back in the news. Former deputy Finance Minister Stefan Kawalec is once again being pursued by legal beagles. He and the former director of the banking division at the Finance Ministry had been investigated for mishandling the stock offering of Bank Slaski 18 months ago. The Slaski stock soared in value soon after it was put out to the public, going many times higher in value than the Finance or bank officials had projected. Kawalec opponents insinuate that he might have profited personally by keeping the price low deliberately. Those who know Kawalec and the former banking division director scoff at those allegations and shrug off the price gyrations in the Slaski stock offering as unintended consequences of actions when too few brokers were available to handle an unexpectedly heavy demand for the stock. They chalk this up to growing pains of an immature - and very volatile - stock market.
After the initial charges went nowhere last spring, some "market" opponents in Parliament threatened to open an investigation into the two. This was headed off by the chief of the Council of Ministers who had been the first finance minister under the PSL-SLD coalition - and who had quit in protest only months into his job when then-Prime Minister Waldemar Pawlak fired Kawalec after the Bank Slaski stock offereing firestorm. Now a higher court has agreed to take up the case against Kawalec and the former banking division director.
Kawalec, especially, is almost a folk hero among market reformers, as a former deputy to "shock therapy" designer Leszek Balcerowicz. He usually was surrounded by Westerners wishing him well, as well as by Poles, at recent dinners or cocktail parties sponsored by the Economist Group or at last week's World Bank cocktail soiree for Washington "cheeses" in town for the fifth anniversary of the bank's operations in Poland.
Kawalec is working on the privatization of Bank Handlowy. Some insiders speculate that the action against the two is really motivated by efforts to derail the privatization process in the banks.
And, if it was said once it was said a dozen times, it will cost more than $7 billion for Poland to double the five million telephone lines it has today, when less than 12 out of every 100 Poles have access to telephones (and that drops sharply to three per 100 in rural areas). Poland's monopoly telecom service, TPSA, may be stepping up its efforts to expand service, but it can never come up with the money required to wire the country.
That means, say both the Poles and the outsiders, that Western telecom giants need to be let in as "partners" to help finance the regional development of basic telephone service. Others at the conference were pushing TPSA to consider letting outsiders share the "backbone" or interconnect system which is a big profit center for TPSA and is essential in tying together the disparate networks of public and private systems in Poland.
The bottom line message: it is in Poland's national security interest to get a modern telecom system in place as soon as possible and that can only be done if outside financing is let in the door. Soon.
* * * *
In London, interest appears to be high in the latest two loan syndications to finance two medium-sized container ships at the Gdynia shipyard. The first consortium is dominated by Polish banks and is led by Bank Rozwoju Exportu (BRE). The second is another syndication led by Citibank, which did the first deal for the Gdynia shipyard last November. The Euromarket syndication, led by Citibank London has been dubbed as "Gdynia Two" and will go a long way to relieving the shipyard's cash-flow problems that have been pervasive since the fall of communism - and enable it to fill the orders that are coming in. It has been using the debt-for-equity provisions under a 1993 law to get rid of its debts, which then frees it up to qualify for new capital from the outside.
* * * *
At a bankruptcy conference sponsored by Deloitte & Touche last spring, analysts said the 1993 law providing for bank and enterprise debt writedowns or debt-for-equity swaps had become the principal vehicle for bankruptcies. That wasn't the purpose, but the prewar bankruptcy laws have proved too inflexible to handle the complexities of today's financially troubled enterprises.
* * * *
The architect of the law, meanwhile, is back in the news. Former deputy Finance Minister Stefan Kawalec is once again being pursued by legal beagles. He and the former director of the banking division at the Finance Ministry had been investigated for mishandling the stock offering of Bank Slaski 18 months ago. The Slaski stock soared in value soon after it was put out to the public, going many times higher in value than the Finance or bank officials had projected. Kawalec opponents insinuate that he might have profited personally by keeping the price low deliberately. Those who know Kawalec and the former banking division director scoff at those allegations and shrug off the price gyrations in the Slaski stock offering as unintended consequences of actions when too few brokers were available to handle an unexpectedly heavy demand for the stock. They chalk this up to growing pains of an immature - and very volatile - stock market.
After the initial charges went nowhere last spring, some "market" opponents in Parliament threatened to open an investigation into the two. This was headed off by the chief of the Council of Ministers who had been the first finance minister under the PSL-SLD coalition - and who had quit in protest only months into his job when then-Prime Minister Waldemar Pawlak fired Kawalec after the Bank Slaski stock offereing firestorm. Now a higher court has agreed to take up the case against Kawalec and the former banking division director.
Kawalec, especially, is almost a folk hero among market reformers, as a former deputy to "shock therapy" designer Leszek Balcerowicz. He usually was surrounded by Westerners wishing him well, as well as by Poles, at recent dinners or cocktail parties sponsored by the Economist Group or at last week's World Bank cocktail soiree for Washington "cheeses" in town for the fifth anniversary of the bank's operations in Poland.
Kawalec is working on the privatization of Bank Handlowy. Some insiders speculate that the action against the two is really motivated by efforts to derail the privatization process in the banks.
