Treasury threatens to seek new strategic investor in PZU scrum
By : Jeffrey Sparshott
Dutch-based pan-European insurer Eureko and the Treasury Ministry continued their dispute over the privatization of Powszechny Zaklad Ubezpieczen (PZU) last week as the ministry said it would seek a new strategic investor for Poland's largest insurer unless Eureko agreed to terms for control of the company.
"A public tender will be in clear violation of the privatization agreement (between Eureko and the Treasury)," said Michal Nastula, assistant director for Eureko. "It would mean that the treasury is looking for another strategic investor. How can you have two strategic investors?"
The announcement raises the stakes in a dispute that became front-page news last fall following Eureko's and consortium partner BIG Bank Gdanski's (BIG BG) purchase of a 30% stake in PZU in 1999. Last November, the Treasury Ministry, which owns 56% of PZU, sought to nullify the deal and removed Eureko's and BIG BG's representatives from PZU's management board. The two sides have since filed complaints in Polish courts and to the European Commission (EC).
Under the original terms of the agreement, the treasury was to make an initial public offering (IPO) of stock before the end of 2001. According to treasury spokeswoman Beata Jarosz, the ministry still hopes to resolve the conflict among PZU's shareholders and move ahead with the IPO, introducing up to 50% of PZU shares on the Warsaw Stock Exchange (WSE) by 2002. "The treasury does not rule out the possibility of a motion to change PZU's privatization strategy one of the options would be, for example, a sale of approximately 30% of shares through a public tender," Jarosz said.
Nastula said Eureko expects Polish courts to make a decision on some aspects of the dispute prior to the next shareholders meeting, scheduled for Feb. 19.
The international scrum has also caught the attention of the EC, the governing body of the European Union (EU), where Eureko filed a complaint in January. Bruno Dethomas, head of delegation for the EC in Poland, said there is some concern that the privatization derailment could influence Poland's accession negotiations with the EU.
"I feel a growing dissatisfaction among member states with this situation," he said, noting that consortium companies are based in seven EU member countries. "There is a feeling that the law is not respected."
"We'd explored every other avenue," Lorrie Morgan, head of communications for Eureko, said of the complaint to the EC. "This is simply an attempt to try to resolve the situation."
A Treasury Ministry official said the ministry does not yet have a copy of the document sent to the EC and, therefore, has no response to it.
Eureko officials maintain that they wish to keep their stake in PZU and to continue the partnership under the terms of the original privatization agreement.
