Slovenia to Accelerate Asset Sales to Gain Investor Confidence

Slovenia is accelerating plans to sell state companies including Nova Kreditna Banka Maribor d.d. and Telekom Slovenije d.d. to regain investor confidence before a bond sale, Finance Minister Janez Sustersic said.

“The government plans to very soon offer some of the government stakes in the banks, but also other companies,” Sustersic said in a Oct. 5 interview in Ljubljana. “We would like to start with some of the so-called hot companies, for which there is a lot of interest, because we need some good examples in short time.”

The government has already picked an adviser to find buyers for Nova Kreditna and Nova Ljubljanska Banka d.d., which are struggling with rising bad loans as the economy enters its second recession in three years. The government, which owns an indirect majority in both banks, will also seek a buyer for insurance company Zavarovalnica Triglav d.d.

Slovenia is pushing ahead with efforts to stabilize its banking industry and overhaul the economy to attract investors from abroad and reduce the state’s role in the economy. The former Yugoslav republic, the first post-communist country to adopt the euro in 2007, plans to sell its first U.S. dollar-denominated bond, offering $1.5 billion in 10-year debt by December, Sustersic said last month.

The government has presented its budget spending for the next two years, targeting a budget deficit of around 3.5 percent of gross domestic product by year’s end and below 3 percent by the end of next year.

“This is the package that we will present to investors and there will also be a lot of questions about privatization,’” Sustersic said.

Bond Sales

Slovenia hasn’t sold any benchmark bonds this year after it scrapped a debt sale in April because borrowing costs for Spain and other peripheral nations surged on concern the debt crisis was spreading.

Slovenia’s own borrowing costs topped 7 percent for most of August and then dropped after European Central Bank President Mario Draghi said the bank was prepared to act along with the EU to bring down borrowing costs by purchasing bonds of distressed euro-area nations.

Privatization is a “fundamental way to solve banks’ problems and lower the debt burden of the corporate sector,” Antonio Spilimbergo, the head of the International Monetary Fund mission to Slovenia, said on Oct. 2.

The government wants to reduce its stakes in banks and other financial firms to 25 percent. Nova Kreditna bank will probably be among the first state-owned companies to be offered for sale, according to Sustersic.

Recapitalization Program

“The bank has a program of recapitalization, which involves selling some of their assets and buying back some of the instruments,” Sustersic said. “It’s important that we try to attract private investors to the bank.”

Nova Kreditna is selling its 51 percent holding in Zavarovalnica Maribor d.d. with Austria’s Uniqa Versicherungen AG and Grazer Wechselseitige Versicherung AG also interested in acquiring the Slovenian insurer, WirtschaftsBlatt newspaper said today. The Maribor-based lender needs 100 million euros ($130 million) and may be acquired by Russia’s Gazprombank OJSC, Slovenian newspaper Finance reported on Oct. 3.

Slovenia sought to sell a majority of Telekom Slovenije in 2008 with Skipti ehf of Iceland and a partnership of Bain Capital LLC, Germany’s Axos Capital and Slovenia’s BT Globalne storitve d.o.o. among the bidders. The government canceled the sale because it deemed offers unacceptable.

“The plan for Telekom is in the making and I can see activities starting very soon but I don’t think a deal can be accomplished by the end of the year,” Sustersic said, adding the sale may be completed as soon as in six months.

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