Slovenia Business Week no. 38, November 27, 2006
Table of Contents
HEADLINES ............................................................................................................................. 3
Slovenian Tourist Board to Open Office in Brussels ............................................................. 3
State Fund Offloaded 40 Ownership Stakes since 2006 ........................................................ 3
Euro Act Enters into Force ..................................................................................................... 3
INTERNATIONAL COOPERATION ...................................................................................... 5
Minister: Cooperation Vital for Protection of Mediterranean ................................................ 5
Draskovic Reassured of Slovenia's Support ........................................................................... 5
Drnovsek Receives Credentials of New Ambassadors .......................................................... 6
PM Says Finland in Favour of SIS I Plus Expansion ............................................................. 6
Finland Welcomes Slovenia's Experience with Western Balkans ......................................... 7
EUROPEAN UNION ................................................................................................................. 8
Bozic: Fifth Corridor Cannot Circumvent Slovenia .............................................................. 8
Lukacic: New Fisheries Regulations to Benefit Slovenia ...................................................... 8
Minister Upbeat about Slovenian Cohesion Policy................................................................ 9
PM Jansa Says EU Must Keep Promise on Galileo HQ ........................................................ 9
Government Says Slovenia Will Be Ready for EU Presidency ........................................... 10
Slovenia Favours Fresh Investment to Boost Energy Efficiency ......................................... 10
LEGISLATION ........................................................................................................................ 12
Government Tweaks Railways Legislation to Restructure Sector ....................................... 12
Government Adopts Bill on Financial Instruments .............................................................. 12
Parliament Passes Package of Public Procurement Laws .................................................... 13
Parliament Unanimously Passes New Banking Act ............................................................. 13
Copyright Decree Challenged at Constitutional Court ........................................................ 14
MPs Pass Animal Feed Act .................................................................................................. 14
STATISTICS/FORECASTS .................................................................................................... 15
Value of Construction Works in Slovenia Stood at EUR 2bn in 2005 ................................ 15
FINANCE................................................................................................................................. 16
Parliament Passes 2007, 2008 Budgets ................................................................................ 16
Abanka on Track to Beat Asset and Profit Targets for 2006 ............................................... 16
NLB Has Contingency Plans for Euro Changeover ............................................................. 16
Ljubljana Stock Exchange .................................................................................................... 17
Foreign Exchange ................................................................................................................. 17
REGIONAL INFORMATION ................................................................................................ 18
Government Official Unveils Two Tourism Projects in NE Slovenia ................................. 18
BRANCH INFORMATION .................................................................................................... 19
Lawmakers Pave the Way for Creation of Engineering Academy ...................................... 19
COMPANIES ........................................................................................................................... 20
Both Bids for Takeover of Mlinotest Raised ....................................................................... 20
Sava Exceeds Plans in First Nine Months ............................................................................ 20
Geoplin Supervisors Replace Management ......................................................................... 20
Slovenian Impol Opens New Plant in Serbia ....................................................................... 21
Retail Magnate Buys Telecommunications Company ......................................................... 21
UPS Begins Daily Cargo Flight to Ljubljana ....................................................................... 22
Old Palace Hotel Will Pamper its Guests Again in 2008 ..................................................... 22
MBO of Viator & Vektor Gets Underway ........................................................................... 23
Ibiko Gives Up Acquisition Plans for Sava for Now ........................................................... 23
Appellate Court Upholds Permission for Krka's Zyllt in Poland ......................................... 24
Telco Increases Revenues, Profit in First Nine Months ....................................................... 24
Chamber of Commerce and Industry of Slovenia Gets Interim President ........................... 25
Iskraemeco Hopes to Get New Ownership in 2007 ............................................................. 25
Krka Banned from Selling Zyllt in Serbia again .................................................................. 26
Motorway Company Gets Go-Ahead for EUR 300m EIB Loan ......................................... 26
Mobitel Introduces Single-Tier Management Structure ....................................................... 26
Steel Group's Posts EUR 15.5m in 9-Month Profits ............................................................ 27
Port Operator Luka Koper Ups Revenues, Profits ............................................................... 27
Sugar Factory CEO Says Biofuel Production in National Interest ...................................... 28
Erjavec: Elan Could Give More Focus to Army Equipment ............................................... 28
FAIRS, CONGRESSES ........................................................................................................... 30
Slovenian Book Fair to Stage Visitors' Forum This Year .................................................... 30
SLOVENIA IN BRIEF ............................................................................................................ 31
Slovenia and Bulgaria Agree Cooperation in Home Affairs ................................................ 31
EU Troika Justice Ministers Determine Presidency Priorities ............................................. 31
PM Stresses Importance of Social Dialogue ........................................................................ 31
Parliament Speakers Protest against Schengen Delay.......................................................... 31
2
HEADLINES
Slovenian Tourist Board to Open Office in Brussels
The Slovenian Tourist Board (STO) is to open an office in Brussels on 1 January, to be
headed by Rok Klancnik
The Slovenian Tourist Board (STO) is to open an office in Brussels on 1 January, to be
headed by Rok Klancnik, the national tourism organisation said on Monday, 20 November.
Klancnik, the former head of communication at the World Tourism Organisation (UNWTO),
is just one of the newly-appointed heads of the STO's offices abroad.
The board also chose Majda Rozina Dolenc for its representative in Germany's Munich and
Gorazd Skrt for its office in Italy's Milan.
The presentation of the new heads of offices took place as part of the STO's meeting with
representatives of Slovenian tourism companies in Crnomelj, SE Slovenia.
The STO believes the Brussels' office will make a significant contribution to improving
Slovenia's standing as a tourism destination on the Belgian market and strengthen the
country's contacts with various EU institutions.
State Fund Offloaded 40 Ownership Stakes since 2006
Its financial investment now stands at SIT 326.4bn (EUR 1.36bn)
The Pension Fund Management (KAD), a state-run fund, offloaded SIT 10bn (EUR 41.73m)
in shares in companies in 2006. Its financial investment now stands at SIT 326.4bn (EUR
1.36bn). The data was reviewed by KAD supervisors at their session in Ljubljana on Monday,
20 November.
A third offering of stakes, (KAD), Restitution Fund (SOD), another state-run fund, and the
DSU management and consultancy enterprise, meanwhile resulted in 71 acquisition offers, for
state's stakes in 84 companies.
The offering was published in early October and includes retailer Merkur, newspaper
publisher Dnevnik, graphics company Cetis and hotel operator Terme Maribor.
The supervisors also agreed that KAD's operations were successful in line with plans in the
first nine months of 2006.
Euro Act Enters into Force
The act on the euro, which defines the procedures during Slovenia's changeover to the euro
as a national currency on 1 January 2007, entered into force on 24 November
The act on the euro, which defines the procedures during Slovenia's changeover to the euro as
a national currency on 1 January 2007, entered into force on Friday, 24 November.
The act deals with the procedure for adopting the euro, sets the period when both currencies
will be in use and determines the withdrawal of the tolar from circulation.
Serving as the legal basis for a smooth transition in public administration, the judiciary,
financial markets and the economy, the bill defines that both currencies will be in circulation
for the first two weeks of 2007.
Cash-free transactions will be carried out in euros from 1 January 2007. The main interest rate
SITIBOR will be replaced by EURIBOR, whereas tolar deposit accounts, securities, contracts,
bills and other financial instruments will be transformed into euros on the day of the switch
free of charge.
The bill also determines that in the first two months of 2007 banks, savings banks and post
offices will have to exchange tolars for euros free of charge. Slovenia's central bank will
3
change tolar banknotes for euros indefinitely and without commission, but it will only
exchange tolar coins until 31 December 2016.
4
INTERNATIONAL COOPERATION
Minister: Cooperation Vital for Protection of Mediterranean
Cooperation between countries and between companies, research and educational institutes,
and the authorities is vital for the effective protection of the Mediterranean Sea, Environment
Minister Janez Podobnik told STA at the sidelines of the 3rd Euro-Mediterranean Partnership
environmental conference in Cairo
Cooperation between countries and between companies, research and educational institutes,
and the authorities is vital for the effective protection of the Mediterranean Sea, Environment
Minister Janez Podobnik told STA on Monday, 20 November at the sidelines of the 3rd EuroMediterranean Partnership environmental conference in Cairo.
Speaking as the representative of all the Mediterranean countries and the president of the
Barcelona Convention signatories, Podobnik presented the importance of the convention on
the protection of the Mediterranean Sea.
This convention has connected the Mediterranean countries in implementing the
Mediterranean Action Plan for the preservation of the sea environment and coastal areas, he
told the participants of the two-day conference.
We have an opportunity and responsibility to strengthen cooperation between regional
institutions and promote sustainable use of sea and coastal areas, Podobnik said, adding that
this is the basis for improving the quality of life in the Mediterranean.
Podobnik also held a number of bilateral meetings in Cairo, including with the EU
Environment Commissioner Stavros Dimas, and his Finnish and Italian counterparts Jan-Erik
Enestam and Alfonso Pecoraro Scanio.
The environment ministers of the partnership have also agreed on a number of joint measures
within the EU Horizont 2020 project that aims to clean up the Mediterranean by 2020 in
cooperation with the Mediterranean countries.
The participants also agreed that Slovenia will in June 2007 host a conference on the best
ways of exploiting underground water sources in the Mediterranean.
Draskovic Reassured of Slovenia's Support
Foreign Minister Dimitrij Rupel has reassured his Serbian counterpart Vuk Draskovic of
Slovenia's support for democratic Serbia and its European future
Foreign Minister Dimitrij Rupel has reassured his Serbian counterpart Vuk Draskovic of
Slovenia's support for democratic Serbia and its European future. "I cannot imagine an EU
without Serbia. The EU needs Serbia too," Rupel said after meeting Draskovic in Ljubljana on
Tuesday, 21 November.
Rupel does not think the EU will be perfect as long as there is a missing link between
Slovenia and Greece.
Draskovic got the same assurances from Prime Minister Janez Jansa, who promised specific
forms of assistance in Serbia's reform process and adoption of EU standards.
"We are proud of our cooperation with democratic forces in Serbia typically represented by
my colleague Draskovic," Rupel said. He praised the "unrelenting friendship" between the
two nations, based on 70 years of their life together in the former Yugoslavia.
Serbia's foreign minister thanked Slovenia for its support. According to him, Slovenia will
have the role of Serbia's advocate at the NATO summit in Riga later this month. He said
Slovenia was the best example for Serbia to learn from.
5
Referring to the EU requirement for Serbia's full cooperation with the Hague tribunal,
Draskovic said it was unwise to set new impediments on Serbia's progress towards the EU and
NATO.
He said the requirements would be met more swiftly, had Serbia already been part of those
structures, or had accession talks started. He nevertheless pointed out that Serbia would not go
back to its past.
Drnovsek Receives Credentials of New Ambassadors
President Drnovsek received the credentials of the new French Ambassador to Slovenia,
Chantal de Ghaisne de Bourmont, and the non-resident North Korean Ambassador, Kim
Kwang Sop
President Drnovsek received on Wednesday, 22 November the credentials of the new French
Ambassador to Slovenia, Chantal de Ghaisne de Bourmont, and the non-resident North
Korean Ambassador, Kim Kwang Sop.
Drnovsek and de Ghaisne de Bourmont agreed that bilateral relations were very good and set
to improve as France takes over from Slovenia as the presiding EU country in 2008.
The talks focused on the future of the EU. Drnovsek was quoted as saying by his office that
the ratification of the constitutional treaty stalled in France, so France should put forward new
ideas to make the EU more efficient.
Drnovsek also said it was important that the member states reach an agreement on the
development of the bloc as soon as possible.
Ambassador de Ghaisne de Bourmont, who was previously ambassador in Estonia, is
succeeding Dominique Gazuy, who had been stationed in Slovenia from October 2003.
Kim Kwang Sop meanwhile told Drnovsek that North Korea is striving for a peaceful
resolution to the North Korean nuclear issue. Drnovsek stressed that dialogue is the only
means for solving problems, while violence only begets violence, his office said in a press
release.
Kim, who will cover Slovenia from Vienna, also told Drnovsek that North Korea is still
combating the consequences of natural disasters that hit the country in the 1990s.
Drnovsek added that Slovenia is monitoring the developments on the Korean Peninsula.
PM Says Finland in Favour of SIS I Plus Expansion
Finland "decidedly favours" the implementation of the Schengen Information System I Plus
(SIS I Plus), an interim solution which would allow EU newcomers to join the Schengen noborder zone, PM Janez Jansa said after meeting Finnish PM Matti Vanhanen in Helsinki
Finland "decidedly favours" the implementation of the Schengen Information System I Plus
(SIS I Plus), an interim solution which would allow EU newcomers to join the Schengen noborder zone, PM Janez Jansa said after meeting Finnish PM Matti Vanhanen in Helsinki on
Wednesday, 22 November.
Vanhanen labelled the delay in SIS II implementation a "disappointment" also for the Finnish
EU presidency, which is striving to cut the delay as well as examine the options to set up an
alternative system.
According to Vanhanen, Finland is still looking into ways to solve the delay, with the results
to be unveiled at the December meeting of EU justice and interior ministers.
Jansa meanwhile said that if the decision on expanding the existing Schengen Information
System is adopted at the meeting, "future steps will depend on the capability of member
states".
"Schengen will certainly be on the agenda of the December summit, but it is hard to tell in
what form," the Slovenian PM added.
6
Several EU newcomers, including Slovenia, called for the Schengen expansion and the
possibility for implementing an alternative "SIS I for All" system to be put on the agenda of
the summit at the November meeting of EU foreign ministers in Brussels.
This would allow the newcomers to avoid the delay in entering the Schengen zone. According
to some reports, the delay in the implementation of SIS II could amount to as much as two
years.
The original plan called for SIS II to be implemented by the end of October 2007. The new
time line and alternative options will be decided by EU interior ministers at their December
meeting.
Jansa and Vanhanen also touched on the complications regarding fisheries that surfaced
during Croatia's accession negotiations and involve a bilateral agreement with Slovenia.
"This is not a big issue, but it is a sensitive problem," Jansa said. Slovenia is not blocking
agreement on fisheries, it is merely making efforts to find an "appropriate solution," he added.
According to Jansa, "if there is good will - including on Croatia's side - things will move on."
Finland Welcomes Slovenia's Experience with Western Balkans
Prime Minister Janez Jansa said after talks with his Finnish counterpart Matti Vanhannen
that the enlargement of the EU to the Western Balkans would be one of the main topics not
only of the December EU summit, but also of Slovenia's EU presidency in the first half of
2008
Prime Minister Janez Jansa said after talks with his Finnish counterpart Matti Vanhanen on
Wednesday, 22 November that the enlargement of the EU to the Western Balkans would be
one of the main topics not only of the December EU summit, but also of Slovenia's EU
presidency in the first half of 2008.
The Finnish prime minister said it was very useful to get acquainted with Slovenia's
experience in the Western Balkans, Jansa told reporters after talks with his Finnish opposite
number.
According to Jansa, Vanhanen indicated that the "enlargement signals" would be positive at
the summit. "There will be no delays on the set dates and no new conditions," Jansa quoted
Vanhanen as saying.
Jansa said that the enlargement strategy which the European Commission unveiled recently
was a "good basis" for the enlargement debate at the EU summit, which will be "quite focused
on the Western Balkans".
"Slovenia is at the edge of this region, so its long-term stability is important for several
reasons...The people there have suffered too much, they deserve a better future," he said.
Jansa also briefed Vanhanen and Finnish Parliament Speaker Paavo Lipponen on the recent
talks with government officials from Kosovo and Serbia (Kosovo Prime Minister Agium
Ceku and Serbian Foreign Minister Vuk Draskovic were in Slovenia recently).
"Our assessment is very welcome, for it is quite precise," Jansa said.
Talks with the Finnish officials also touched on bilateral economic cooperation, with Jansa
announcing that scheduled flights (four times a week) between Ljubljana and Helsinki would
be launched in the spring.
7
EUROPEAN UNION
Bozic: Fifth Corridor Cannot Circumvent Slovenia
Transport Minister Janez Bozic assured European Transport Commissioner Jacques Barrot
that Slovenia was taking all the measures needed for the implementation of the project that
would connect the French city of Lyon with the Ukrainian border
Transport Minister Janez Bozic assured European Transport Commissioner Jacques Barrot on
Monday, 20 November that Slovenia was taking all the measures needed for the
implementation of the project that would connect the French city of Lyon with the Ukrainian
border.
As Bozic offered a "comprehensive presentation" of Slovenia's activities related to project No
6, which is a part of the 5th pan-European transport corridor, he said that "Slovenia wants this
priority project to remain unchanged".
Rejecting a proposal by the coordinator for the 5th corridor, Loyola de Palacio, who
suggested that Trieste and Budapest could be connected with a new line crossing Austria,
Bozic said "that Slovenia will follow the original target".
"The meeting was necessary to provide the commissioner with first hand information and
directly convince him that Slovenia has approached this project will due seriousness," Bozic
explained, adding that Barrot commended Slovenia for this attitude.
In her September report to the European Commission, Loyola de Palacio expressed doubt
over Slovenia's ability to meet the timeplan and carry the costs of its part of the 5th corridor
project and suggested an alternative route across Austria.
"Slovenia is a European country. The shortest 5th corridor route runs through Slovenia and
Slovenia cannot accept an alternative solution," Bozic commented, labelling de Palacio's
concerns as "personal opinion".
Many steps are still needed, but an important one has been made with the law on the financing
of railway projects in the 2006-2009 period, Bozic pointed out.
According to Bozic, the "written material with clearly defined goals" will now be carefully
examined by the commissioner.
Lukacic: New Fisheries Regulations to Benefit Slovenia
Attending at a meeting of EU agriculture ministers Slovenia's Marija Lukacic said Slovenia
was very much in favour of proposals concerning management measures for the sustainable
exploitation of fishery resources in the Mediterranean and the electronic operating and
reporting on fishing activities
Attending at a meeting of EU agriculture ministers on Monday, 20 November, Slovenia's
Marija Lukacic said Slovenia was very much in favour of proposals concerning management
measures for the sustainable exploitation of fishery resources in the Mediterranean and the
electronic operating and reporting on fishing activities.
As regards the first regulation proposal, Lukacic highlighted "the introduction of management
plans", which would enable all member states to address the fishing specifics of their
territorial waters.
The regulation would for example enable the reduction of the minimum distance to the shore
that allows fishing activities, Lukacic told STA.
"The aim of the first regulation is securing sustainable fishing, both in terms of the
exploitation of marine resources as well as of protection sensitive habitats, while at the same
time considering the specifics of small-scale fishing in near-shore waters in the
Mediterranean," she explained.
8
With regard to the second regulation, Lukacic acknowledged the need for such a system, but
also pointed to the high costs that Slovenia would incur in setting it up considering its small
fleet.
"The European Commission is promising member states financial support in setting up the
system, which under the new provisions could also exceed 50% of the costs," she said, adding
that fisheries commissioner Joe Borg has promised at least 50% in aid to Slovenia.
Minister Upbeat about Slovenian Cohesion Policy
Slovenia is following the EU in reforming its cohesion policy, as witnessed by the National
Development Strategy that follows the goals of the Lisbon Strategy to the fullest possible
extent
Slovenia is following the EU in reforming its cohesion policy, as witnessed by the National
Development Strategy that follows the goals of the Lisbon Strategy to the fullest possible
extent, Local Self-Government and Regional Policy Minister Ivan Zagar has said.
Slovenia is also preparing efficient national projects in the 2007-2013 period, Zagar added on
Tuesday, 21 November in Brussels on the sidelines of an informal meeting of EU regional
policy ministers.
The ministers moreover stressed the need for quick and efficient transfer of good practices,
Zagar revealed, explaining that examples of such practices abound in Slovenia.
He also pointed out that Slovenia would get substantially more money from EU funds in the
coming financial perspectives than it did in the past.
While it got EUR 450m in the first two years of its EU membership, it will get EUR 3.7bn
from EU structural and cohesion funds in the 2007-2013 period.
EU ministers also stressed the importance of transferring the goals of the strategy into practice
on regional levels.
PM Jansa Says EU Must Keep Promise on Galileo HQ
Prime Minister Janez Jansa urged Finnish counterpart Matti Vanhanen, whose country
currently holds the EU presidency, to ensure that the EU keeps its promise on basing the
headquarters of the Supervisory Authority of the European satellite navigation system Galileo
in one of the new EU members
Prime Minister Janez Jansa urged on Wednesday, 22 November in Helsinki Finnish
counterpart Matti Vanhanen, whose country currently holds the EU presidency, to ensure that
the EU keeps its promise on basing the headquarters of the Supervisory Authority of the
European satellite navigation system Galileo in one of the new EU members.
"It would be only fair that the EU respects its decision from several years ago that the
headquarters of new agencies be based in one of the new members," Jansa said after the talks
with Vanhanen. He stressed that "Slovenia was among the best prepared candidates" to host
the agency.
He explained that Slovenia maintains that the decision taken by the EU in 2003 must be
respected. "It is imperative that principles are respected, as the EU stands to lose its credibility
otherwise," he added.
"Decisions must be either respected or changed if circumstances change," Jansa added. "The
decision will not be easy but the new members should be given certain preference in the
selection," Jansa told the press.
He explained that Slovenian officials acquainted Finnish counterparts of data which shows
that among the EU-15, almost all countries host at least one seat of an EU agency.
Jansa was confident that "fulfilling criteria" would be the deciding factor in the decision on
where the Galileo agency will be headquartered.
9
"Slovenia is good, even competitive, in this respect," said Jansa, adding that EU officials who
are informed with Slovenia's bid agree with this view.
Government Says Slovenia Will Be Ready for EU Presidency
The government adopted a semi-annual report on preparations for the EU presidency in the
first half of 2008 which says that preparations are on track and Slovenia will be ready by 1
January 2008
The government on Thursday, 23 November adopted a semi-annual report on preparations for
the EU presidency in the first half of 2008 which says that preparations are on track and
Slovenia will be ready by 1 January 2008. The cabinet also endorsed the draft programme of
the successive presidencies of Germany, Portugal and Slovenia, which is to be adopted at the
EU Council in December.
The report says that the 18-month programme of the troika's successive presidencies has been
coordinated in negotiations from April to October.
The core working group for the presidency meanwhile adopted an action plan which
determines the tasks and jurisdictions of the ministries and between the government and
Brussels.
Moreover, a logistics centre was set up in April in the framework of the government
secretariat and an amended staffing plan was adopted in July.
It is projected that 1,200 public servants will be assigned to the projects, with an additional
310 fixed-term employees helping out. At the Slovenian permanent mission in Brussels alone
170 people will be taking part.
Public servants included in the project directly or indirectly are already undergoing intensive
training.
Having reviewed the agenda of meetings to take place in Slovenia during the six-month
presidency, the government reassessed the costs and concluded that they will be at SIT 13.7bn
(EUR 57m), as initially planned.
The core working group has already confirmed eight informal meetings in Slovenia as well as
one informal dinner in Brussels.
The report says that preparations between April and October consisted of exchanges with
other member states, in particular Germany, Portugal and France, the latter presiding the EU
after Slovenia.
Slovenia Favours Fresh Investment to Boost Energy Efficiency
Slovenia believes that fresh investment and systematic funding are the essential components
of efforts to boost energy efficiency, in addition to a uniform interpretation of regulations on
state aid for energy efficiency projects
Slovenia believes that fresh investment and systematic funding are the essential components
of efforts to boost energy efficiency, in addition to a uniform interpretation of regulations on
state aid for energy efficiency projects, a Slovenian official said on Thursday, 23 November
after a meeting of EU energy ministers.
"It is our desire that a stable and clear regulatory framework for the promotion of renewable
energy sources be formed," Igor Salamun, the head of the Economy Ministry's directorate for
energy, told STA after the meeting.
"Slovenia believes that long-term objectives for the share of renewables can only be indicative
until the implementation of a uniform system of measures for the achievement of the goals set
at the EU level," Salamun added.
The energy ministers were discussing a six-year action plan on energy efficiency that the
European Commission unveiled in October.
10
The Commission believes that the bloc could save up to 20% of energy by 2020, which would
also have positive economic effects and cut CO2 emissions.
According to Salamun, this is the Commission's estimate while "reality will show how
implementable it is".
Asked about Slovenia's success in energy efficiency, Salamun did not provide a concrete
estimate. He said that the authorities were working on mechanisms to promote energy
efficiency and renewables.
"All of Europe must invest more in energy generation. This is a challenge, but it is also an
opportunity for renewable energy sources," he said.
Interestingly, the ministers were faced with the reality of electricity shortages when their
meeting was interrupted by a 20-minute power outage in the EU Council building.
11
LEGISLATION
Government Tweaks Railways Legislation to Restructure Sector
According to Transport Minister Janez Bozic, the key goal of the proposed legislation is to
implement EU directives and to fix weaknesses from the current law, particularly in the field
of public railways infrastructure
The Slovenian cabinet confirmed on Thursday, 23 November amendments to the railways act
whose aim is to restructure the sector by setting up a new regulatory body and turning the
Slovenian Railways into a single company again.
According to Transport Minister Janez Bozic, the key goal of the proposed legislation is to
implement EU directives and to fix weaknesses from the current law, particularly in the field
of public railways infrastructure.
Bozic stressed that the document deals with all players in the railways sector and clearly sets
down their powers and duties.
Under the proposed changes, the Railways will be overhauled into a single company that will
continue to act as a railways operator, but will also be in charge of managing public railway
infrastructure.
The latter role is being taken away from the Public Agency for Railway Transport, which will
instead be in charge of railway safety and ensuring fair access to railway infrastructure to
railway companies.
Moreover, a new regulatory commission would be established by the government, whereas
the Transport Ministry is to be in charge of setting the railway infrastructure fee and certifying
the timetables of rail operators. The ministry will also oversee investment in public rail
infrastructure, Bozic explained.
According to Bozic, the Slovenian Railways will manage public railway infrastructure but not
private infrastructure, which is expected to be built in the future.
Finance Minister Andrej Bajuk said it was imperative that the proposed legislation opens the
possibility to public-private partnership in the railways sector.
Bajuk explained that this was even more important given the huge sums that need to be
invested as part of railway modernisation projects planned for the coming years.
Bozic added that the proposed amendments are to be sent to parliament for adoption in
emergency procedure because they transpose two EU directives concerning rail transport.
The document also deals with the complaints voiced recently by the Court of Audits, which
said the authorities failed to transform the companies in line with a law adopted following a
referendum held in 2003.
The audit report established other violations, including public contracts worth more than SIT
100bn (EUR 418m) that were awarded contrary to public procurement rules.
Government Adopts Bill on Financial Instruments
According to Finance Minister Andrej Bajuk, the bill transposes four EU directives and
tackles various transitional specifics of the Slovenian capital market
The cabinet adopted on Thursday, 23 November a bill on the financial instruments market.
According to Finance Minister Andrej Bajuk, the bill transposes four EU directives and
tackles various transitional specifics of the Slovenian capital market.
The market for securities and other financial instruments is presently regulated by the
securities market act. However, if it was amended with the four EU directives almost all
articles would have to be tweaked, hence the decision for a fresh bill, Bajuk said.
12
According to Bajuk, the main novelties of the comprehensive, 578-article bill include:
expansion of regulated trading platforms, new provisions on real time disclosure of deals with
shares, expansion of the portfolio of services offered by brokerages, new rules on carrying out
orders, and changes to the way brokerages market their services.
The bill also expands the array of tools available to the Securities Market Agency, giving it
more breathing space for action and greater powers for the interpretation of regulations.
The government is already drafting a new bill in this field. It will regulate the status of former
authorised investment funds and is to be adopted later this year.
Parliament Passes Package of Public Procurement Laws
The parliament passed a package of public procurement laws, including the framework act on
public-private partnership which is designed to boost private investment in infrastructure
projects
The parliament passed on Thursday, 23 November a package of public procurement laws,
including the framework act on public-private partnership which is designed to boost private
investment in infrastructure projects.
The act on public-private partnership will be applicable to all forms of public-private
partnerships: contractual partnerships, licence agreements and public contracting
relationships.
It obligates all contracting parties to examine the feasibility of public-private partnership for
projects above 5.2 million euros.
The opposition disputed the act, saying that it paves the way for an opaque privatisation of
public institutions.
Finance Minister Andrej Bajuk told deputies in second reading on Tuesday, 21 November that
public-private partnership does not mean privatisation, as the public partner will supervise the
projects.
The act also sets up a special unit within the Finance Ministry to monitor the projects and
keep the records.
The public procurement act and the act on public procurement in water management, energy
and transport meanwhile transpose two EU directives on public contracting.
The member states should have transposed the directives by 1 February this year and Slovenia
had already received a second reprimand from the European Commission for the delay.
The new acts include provisions to improve transparency in public procurement procedures
and ensure more economical use of funds.
The new act on public procurement in water management, energy and transport takes public
contracting in these fields from the general public procurement act and subjects them to
specific requirements.
Parliament Unanimously Passes New Banking Act
The National Assembly unanimously passed the new banking act, which introduces stricter
and more complex mechanisms for capital adequacy in line with what is known as the Basel II
standards
The National Assembly on Thursday, 23 November unanimously passed the new banking act,
which introduces stricter and more complex mechanisms for capital adequacy in line with
what is known as the Basel II standards.
Basel II sets less stringent criteria for capital adequacy for credit risk but determines
additional capital adequacy requirements for operational risk.
The new system lowers capital adequacy requirements for all banks, but it requires from
bigger banking systems that they use more sophisticated models for the valuation of market
13
risks, Katja Bozic, the head of the Finance Ministry's directorate for the financial system, said
as she unveiled the act in early October.
This will facilitate the operations of small and medium-sized banks as well as mortgages, she
said, adding that an analysis carried out in 40 countries had shown that capital requirements
for smaller banks will be reduced.
Meanwhile, bigger cross-border banking groups will have to use advanced valuation models.
The Basel II standards also upgrade the supervision between the supervisors in the country of
the head office and the countries of the subsidiaries, giving special powers to the supervisor in
the country of the head office in certain cases.
Copyright Decree Challenged at Constitutional Court
Several retailers launched a constitutional challenge, disputing a recent decree that stamped
a compensation fee on all products used for personal reproduction, including players and
media
Several retailers launched on Thursday, 23 November a constitutional challenge, disputing a
recent decree that stamped a compensation fee on all products used for personal reproduction,
including players and media.
The decree on a compensation fee for personal reproduction, which entered into force on 21
October, stamps the fee on all media and products that can be used for such reproduction,
including CDs, DVDs, audio and video cassettes, memory cards, hard drives and
photocopiers.
According to lawyer Miha Sipec, the retailers want to stay the decree because it does not
respect the principle of reciprocity. They believe that the fee should not be set in absolute
terms, but ought to depend on the price of the product.
The fee, which according to retailers' calculations ranges from 8 SIT to 7000 SIT (between 3
euro cents and EUR 29.21) should moreover amount to no more than three or four percent of
the product's price.
The retailers' calculations put the fee between at 30% and 40% of the price of the product, and
even at 110% in one case.
The retailers are convinced that the fee would worsen the position of Slovenian retailers and
cause a surge in smuggling from other countries.
Sipec expects the court's decision in several weeks' time.
The decree is not yet being used in real life, as copyright holders have not yet authorised the
body which would collect the proceeds from the fee.
MPs Pass Animal Feed Act
The parliament passed the animal feed act that brings Slovenian legislation in line with the
EU legal order
The parliament passed unanimously on Friday, 24 November the animal feed act that brings
Slovenian legislation in line with the EU legal order. Among others, the new act introduces
the principle of traceability through the entire food chain.
The act abolishes some of the provisions of the old act and replaces them with EU directives.
It also harmonises with the EU requirements for official control and procedures for
determining official and national reference laboratories.
The act also sets down that controls are carried out in a way that avoids unnecessary trouble in
trade with non-EU members.
14
STATISTICS/FORECASTS
Value of Construction Works in Slovenia Stood at EUR 2bn in 2005
The value of construction increased in all categories in comparison with 2004
Slovenian construction companies carried out construction works worth nearly SIT 480bn
(EUR 2bn), according to data by the National Statistics Office.
The value of construction increased in all categories in comparison with 2004. It rose by 12%
to SIT 270.5bn (EUR 1.13bn) for buildings, and by over 1% to SIT 207.1bn (EUR 864.2m) in
engineering.
The value of buildings construction was higher mainly due to the 24% increase in the value of
residential construction.
The value of non-residential buildings construction meanwhile rose by almost 9%.
15
FINANCE
Parliament Passes 2007, 2008 Budgets
The 2007 budget amendments envisage revenues of EUR 7.8bn and expenditures at EUR
8.1bn, with the deficit at EUR 322.7m, which is 1% of GDP
Amidst a continued walkout by the three opposition parties, the MPs of the ruling coalition
provided the necessary quorum on Monday, 20 November to allow a vote on the 2007 and
2008 budgets. The document for 2007 was passed with 48 votes; the 2008 budget got the
backing of 47 lawmakers.
The 2007 budget amendments envisage revenues of EUR 7.8bn and expenditures at EUR
8.1bn, with the deficit at EUR 322.7m, which is 1% of GDP.
Revenues in the 2008 budget are set at EUR 8.1bn, whereas expenditures stands at EUR
8.4bn. The deficit is to amount to EUR 306.6m, which is 0.9% of GDP.
Abanka on Track to Beat Asset and Profit Targets for 2006
Slovenia's third largest bank said that it raised its total assets by 13.7% to SIT 81.8bn (EUR
341.3m) in nine months through September, beating plans by 6.6%
Slovenia's third largest bank, Abanka Vipa, said on Tuesday, 21 November that it raised its
total assets by 13.7% to SIT 81.8bn (EUR 341.3m) in nine months through September,
beating plans by 6.6%.
The bank said in a press release that net profit for the three quarters stood at SIT 5.5bn (EUR
23m), which is 1.6% more than in the same period last year and 42.3% above plans.
The performance keeps the bank firmly in third place by market share in the Slovenian
banking sector, the bank added.
The bank attributes the quick growth in total assets and net profit to vibrant loan activity: the
amount of loans the bank gave out rose by 22.9% to SIT 506.9bn (EUR 2.12bn) in the first
nine months of the year. Loans to the non-banking sector, foremost to businesses, rose the
most, the press release reads.
NLB Has Contingency Plans for Euro Changeover
To facilitate the changeover, 20 NLB branches across the country will open on 1 and 2
January
Nova Ljubljanska banka (NLB), Slovenia's largest bank, says preparations for the adoption of
the euro on 1 January 2007 are proceeding without major hiccups, but it is still only
"moderately optimistic" about the changeover.
In case anything goes wrong even though 1,300 employees will be deployed at the moment of
the changeover, the bank has contingency plans, Savo Dinjaski, who is in charge of the euro
project, told the press in Ljubljana on Thursday, 23 November.
One of the contingency plans is to open most of the bank's branches in case a significant
number of automatic teller machines (ATMs) are out of order. The banks would pay out
limited amounts of cash, Dinjaski said.
However, despite a recent meltdown of the ATM system, the bank believes there is no reason
for concern considering the comprehensive preparations.
"The results of testing of the IT adaptations are good at NLB. There are relatively few errors,
which we are eliminating successfully," explained the co-head of the project in charge of IT,
Marija Triplat.
16
According to Dinjaski, the supply of euro cash is also proceeding according to plans. "Most of
the cash that was to be supplied by the Bank of Slovenia is already in the bank vaults," he
said.
The bank has found that people are on average poorly informed about the euro, so they have
urged people to deposit the cash they have at home, as all tolar balances will be automatically
converted to euros.
To facilitate the changeover, 20 NLB branches across the country will open on 1 and 2
January. They will pay out smaller amounts of euros.
Ljubljana Stock Exchange
Upbeat results of Slovenian blue chips in the first nine months of 2006 pushed the main
market SBI 20 index to a new all-time high of 6,037.12
Upbeat results of Slovenian blue chips in the first nine months of 2006 pushed the main
market SBI 20 index to a new all-time high of 6,037.12 points on Thursday, 23 November.
However, Friday, 24 November's profit taking depressed the index somewhat, dragging it to
6,004.52 points, still 110.33 points (1.87%) more than the previous Friday.
The SBI TOP index of the six biggest blue chips followed the same path, reaching its peak of
1,430.09 points on Thursday, 23 November before closing at 1,417.33 points on Friday, 24
November, 22.79 points (1.6%) higher on the week.
Volumes were nothing spectacular, however, with brokers concluding a total of SIT 8.32bn
(EUR 34.73m) worth of deals, including SIT 2.13bn (EUR 8.88m) in block trade.
Energy company Petrol was the top performer in terms of volumes, clocking up deals worth
SIT 1.1bn (EUR 4.6m), half of that in block trade. The item added 2.44% to SIT 115,571
(EUR 482.27).
Petrol was followed by pharma company Krka, which added 1.41% to SIT 186,743 (EUR
779.26) on SIT 953m (EUR 4m) of volumes, including SIT 346m (EUR 1.4m) in block trade.
Also ending the week in the black were retailer Gorenje (up 2.62% to SIT 5,558/EUR 23.19),
food, tourism and energy holding Istrabenz (up 4.23% to SIT 9,687/EUR 40.42) and port
operator Luka Koper (up 3.95% to SIT 9,598/EUR 40.05).
Airport operator Aerodrom Ljubljana was the star performer in terms of share price, soaring
10.61% on the week to close on SIT 13,113 (EUR 54.72).
The PIX investment fund index added 40.94 points (0.83%) to 4,958.43, while the BIO bond
index closed the week 1.04 points (0.87%) higher at 119.92.
Foreign Exchange
Mean exchange rate of the Bank of Slovenia
Euro (EUR) - SIT 239.61 (+0.01)
U.S. dollar (USD) - SIT 183.08 (-8.02)
Swiss franc (CHF) - SIT 151.50 (+1.00)
British pound (GBP) - SIT 353.83 (-3.47)
17
REGIONAL INFORMATION
Government Official Unveils Two Tourism Projects in NE Slovenia
The plans for the Megalaxia amusement park and Janezovci Thermal Spa would create
around 1,500 jobs
The district of Spodnje Podravje in NE Slovenia is hoping to become a new tourist force in
Slovenia through the realisation of two projects from the resolution on national development
projects for 2007-2023.
The plans for the Megalaxia amusement park and Janezovci Thermal Spa would create around
1,500 jobs, Marjan Hribar, the head of the Directorate for Tourism at the Ministry of the
Economy, told at a press conference in Destrnik on Friday, 24 November.
According to Hribar, the projects are well thought out and present a good basis for the
development of Spodnje Podravje. An advantage of the projects is that they are
complementary to each other.
Hribar hopes that the projects will give the area a new standard of life and new attractions.
"There is a great possibility that the projects will be financed in part with EU structural
funds", added Hribar.
An investor for the Megalaxia amusement park has already been found and the Hajdina
municipality has confirmed the required spatial plan. The company Cross, which has be
chosen to carry out the project, is currently awaiting building permits.
The Megalaxia project has been evaluated at EUR 105m, while the investors are hoping to get
between EUR 5m and EUR 10m from EU funds.
According to France Puksic, the mayor of the Destrnik municipality, small investors in
Janezovci Thermal Spa are already known, while talks with the major investors are still under
way. "We have four companies from Italy, Austria, and England in the mix, but I would not
talk about the names at this time", added Puksic.
The first phase of the construction of the spa resort would cost EUR 40m, whereas the second
phase involving a golf course would cost an additional EUR 20m. "We are expecting between
EUR 5m and EUR 8m from the EU funds," explained Puksic.
The resolution on national development projects for 2007-2023 is made up of 35 projects
worth a total of EUR 24bn.
18
BRANCH INFORMATION
Lawmakers Pave the Way for Creation of Engineering Academy
The parliament passed an act on the Slovenian Engineering Academy (IAS) in a bid to
promote engineering sciences and contribute to the technological development of Slovenia
The parliament passed on Thursday, 23 November an act on the Slovenian Engineering
Academy (IAS) in a bid to promote engineering sciences and contribute to the technological
development of Slovenia.
The academy is expected to facilitate the development of top-notch technical know-how and
active cooperation in framing research, technology and innovation policies.
In line with the act, the academy will also be tasked with advancing the transfer of research
achievements to business, especially in industry; improving innovation in Slovenian
companies; and boosting the quality of research and development in publicly funded research
institutions.
The government believes that the new academy will not encroach on the field covered by the
Academy of Arts and Sciences (SAZU), but rather complement it.
Only top experts will be elected to the academy based on their merits and achievements, the
government has said.
The academy must be established in two months after the act enters into force. The founding
assembly will be called by a group of scientists and engineers that have so far been part of the
Slovenian Academic Societyfor Technology and Natural Sciences.
19
COMPANIES
Both Bids for Takeover of Mlinotest Raised
Whereas family bakery Pekarna Blatnik said its SIT 1,695 (EUR 7.07) per share was final,
this is well below Zito's latest offer of SIT 1,730 (EUR 7.22)
The stakes have been raised in takeover battle for bread and pasta maker Mlinotest, as both
bidders upped their offers on Monday, 20 November. Whereas family bakery Pekarna Blatnik
said its SIT 1,695 (EUR 7.07) per share was final, this is well below Zito's latest offer of SIT
1,730 (EUR 7.22).
Pekarna Blatnik said in a press release that this was the final viable offer. The company had
embarked on the takeover to secure additional capacity, but now it says it will look at other
options, including the construction of a new bakery.
In a sign that it no longer considers the bidding viable, Pekarna Blatnik has also decided not
to act on the announcement that it will publish a takeover offer for Zito; this had been seen by
analysts as a defensive move designed to thwart Zito's ambitions regarding Mlinotest.
Pekarna Blatnik said it had been in talks with several companies interested in pieces of Zito.
However, it eventually decided that legal procedures regarding the slicing-up of Zito would
be too long and complex.
After Pekarna Blatnik announced the bid for Zito, the Securities Market Agency forced Zito
to convene an extraordinary meeting of shareholders to get approval for the acquisition of
Mlinotest.
Sava Exceeds Plans in First Nine Months
Sava, the chemical and tourism conglomerate, posted sales of SIT 29.2bn (EUR 121.85m) for
the first nine months of 2006
Sava, the chemical and tourism conglomerate, posted sales of SIT 29.2bn (EUR 121.85m) for
the first nine months of 2006. Taking into consideration the loss of revenue from the sale of
its retail branch Sava Trade, like-for-like sales were up 14% over the year before and 4%
above plans, the company said on Monday, 20 November. Net profit was down 8% to SIT
6.5bn (EUR 27.1m).
Sava sold its retail arm to hardware retailer Merkur in April. The transaction was part of a
deal under which Sava became a 20% owner of Merkur through a capital injection and
acquisition of additional shares on the market.
According to Sava, investing the proceeds from the sale of Sava Trade into the shareholding
would produce bigger returns.
Sava says it is still on track to achieving its target for the year, posting SIT 37.1bn (EUR
154.8m) in sales revenues at the end of the year, with profit at SIT 7bn (EUR 29.2m).
Geoplin Supervisors Replace Management
Member of management board at foundry Mariborska livarna Maribor, Alojz Stana, was
appointed as CEO
The supervisory board of gas distributor Geoplin recalled the management board led by Janez
Mozina on Friday, 24 November, 17 November. Member of management board at foundry
Mariborska livarna Maribor, Alojz Stana, was appointed to take Mozina's place as CEO.
Changes at the top of Geoplin were caused by new challenges in securing an additional supply
source, strategic cooperation and more active approaches to customers, the head of the
supervisory board Bostjan Napast said in a press release.
20
The new boss said in a press release that Geoplin is a successful company which faces many
new challenges on the energy market. "The company will focus on seizing all opportunities to
secure the competitive supply of existing and target customers and markets."
When asked by business daily Finance what his plans were, Stana said he would focus on
preparing a new business plan which will be based on "internationalisation, optimisation of
operation, and new activities".
Among the new activities, he stressed gas distribution, storage and trade in other types of
energy. Potential markets include those of Southeastern Europe, especially those of the former
Yugoslavia, he told Finance on Monday, 20 November.
Geoplin's income was SIT 67.7bn (EUR 282.5m) and its profits totalled SIT 5.85bn (EUR
24.4m) in 2005.
In Slovenia natural gas accounts for about 15% of energy supply.
Slovenian Impol Opens New Plant in Serbia
Aluminium rolling mill Impol-Sevanj, in the majority ownership of Slovenian aluminium
maker Impol, opened a new production facility in Sevonj, Serbia
Aluminium rolling mill Impol-Sevanj, in the majority ownership of Slovenian aluminium
maker Impol, opened on Monday, 20 November a new production facility in Sevonj, Serbia.
The new foundry with the capacity of 50,000 tonnes of aluminium a year is the largest in
Europe and one of the three most modern in the world, said Impol CEO Jernej Cokl.
Cokl told the press that the investment in the foundry was worth EUR 12m, while the
investment in a new aluminium cutting line was worth additional EUR 4m.
The new aluminium cutting line's capacity of 40,000 tonnes will enable the company to
become one of the largest producers of cut smooth and corrugated aluminium sheet in Europe.
Impol became the majority owner of the aluminium rolling mill from Sevojno in 2002. When
purchasing the majority stake, the Slovenian company promised to invest US$ 14.5m in the
plant, however it has invested over EUR 30.5m, company's director Ninko Tesic told the
Belgrade daily Vecernje novosti on Monday, 20 November.
The aluminium rolling mill was renamed Impol-Seval and its production increased from
13,596 tonnes in 2002 to over 45,000 tonnes this year. The plant is planning to extend the
production to 81,000 tonnes in 2009.
Tesic also told Vecernje novosti that the production potential of the old and new facilities
together now exceeds 100,000 tonnes of aluminium yearly.
Impol-Seval is one of the largest Serbian exporters and it has already exported EUR 50m
worth of goods this year, according to Vecernje novosti.
The new plant was opened by Serbia's Capital Investment Minister Velimir Ilic. Also present
at the ceremony was Slovenia's ambassador to Serbia Miroslav Luci.
Retail Magnate Buys Telecommunications Company
The owner of one of Slovenia's largest retail chains has acquired Voljatel, the small
telecommunications company, in a private transaction
The owner of one of Slovenia's largest retail chains has acquired Voljatel, the small
telecommunications company, in a private transaction.
Retail magnate Mirko Tus, the owner of the Engrotus chain, paid between EUR 20m and
EUR 25m for the company that is best known for being an Internet service provider, the
Dialog PR agency that represents Engrotus told STA on Tuesday, 21 November.
The agency explained that Mirko Tus bought Voljatel on his own and that neither Engrotus
nor its mobile telecommunications arm Tus Mobil were party to the transaction.
21
In spite of the acquisition of Voljatel, which recently launched mobile telephony operations
with its Izimobil pre-paid brand, Tusmobil intends to continue building its own mobile
network.
The acquisition comes after Engrotus carried out due diligence at Voljatel earlier this year as
it examined potential to make a broader push in the telecommunications market.
The group initially entered the mobile telecommunications market in May by buying out the
license owned by defunct mobile operator Vega.
By the end of May it was entered into the register of national mobile phone operators and
gained operating clearance from the Agency for Post and Electronic Communications.
UPS Begins Daily Cargo Flight to Ljubljana
Package delivery company UPS launched a daily cargo flight from its hub in Cologne to
Ljubljana international airport in Brnik that is part of efforts to turn the airport into a
regional logistics centre
Package delivery company UPS launched on Tuesday, 21 November a daily cargo flight from
its hub in Cologne to Ljubljana international airport in Brnik that is part of efforts to turn the
airport into a regional logistics centre.
The UPS flights will service the newly-established logistics centre built at the airport by
Slovenian logistics company Intereuropa. Packages arriving at the centre will be forwarded
onward to their destinations in Slovenia and countries to the south and east, officials told the
press.
The flights are part of a strategic partnership between the US company, airport operator
Aerodrom Ljubljana, Intereuropa and flag carrier Adria Airways.
According to Michael Mavropolus, the director for the Balkans and Greece at UPS, Ljubljana
has a favourable geographic position, while Slovenia has well-developed road infrastructure
and is gaining importance in European trade flows.
Intereuropa and UPS have until now successful cooperated as partners, said director for the
Balkan region at Intereuropa Goran Travner, who stressed that the cooperation was now being
upgraded.
The daily flight between Cologne and Ljubljana will ensure faster delivery times for both
recipients and senders of packages in Slovenia. Moreover, it will bolster the role of the
logistics centre at Brnik as an important gateway for the markets of the Balkans.
Adria Airways is to carry a part of the packages that will travel onward from the centre to the
Balkans. Janez Krasnja of Adria Airways said that this was important for the development of
the company's cargo flights.
The flag carrier is now expected to launch cargo flights to Sofia and Zagreb to add to the
flights to Sarajevo, Belgrade and Pristina. He said that the new flights are expected to increase
cargo operations by 20%.
Meanwhile, member of the Aerodrom Ljubljana board Zmago Skobir said that the daily UPS
flight is an important step towards realising the company's vision of creating a regional
logistics hub at the airport.
Old Palace Hotel Will Pamper its Guests Again in 2008
Culture Minister Vasko Simoniti and Igor Bavcar, CEO of food, energy and tourism holding
Istrabenz, laid a foundation stone in a symbolic gesture marking the renovation of the Palace
Hotel
Culture Minister Vasko Simoniti and Igor Bavcar, CEO of food, energy and tourism holding
Istrabenz, laid a foundation stone on Tuesday, 21 November in a symbolic gesture marking
the renovation of the Palace Hotel. The investors expect that the hotel will reopen in the
spring of 2008.
22
Bavcar said that investors are facing a challenging time as they will be renovating the hotel,
one of the landmarks of the seaside resort of Portoroz, part of the coast and the area around
the building.
Igor Okorn, the director of Istrabenz's tourism subsidiary Istrabenz hoteli, told the press the
investment is worth EUR 37.5m, with the state contributing EUR 4.17m. Istrabenz, the hotel's
owner, is providing the rest of the funding.
Okorn explained that the facility will become the first Slovenian hotel in the five stars de luxe
category. It will have 185 rooms, including luxurious presidential suites, and sport a congress
centre, library, gallery, and wellness centre.
When it was built at the end of the 19th century, the luxurious Palace Hotel was the largest
hotel of the Austro-Hungarian Empire.
It boasted top-of-the-line equipment and a variety of premises for socialising such as a
reception room, a crystal hall as well as gentlemen and ladies' salons.
The hotel was last refurbished in 1951 and has been closed since 1990.
MBO of Viator & Vektor Gets Underway
Vektor and Petin, two small companies affiliated with the chairman of logistics group Viator
& Vektor, published a takeover bid for the group
Vektor and Petin, two small companies affiliated with the chairman of logistics group Viator
& Vektor, published a takeover bid for the group on Wednesday, 22 November. In what is yet
another in a series of management buyouts in the ranks of Slovenia's largest companies,
Vektor and Petin are offering SIT 35,000 (EUR 146.05) per share.
The bid, open until 19 December, is targeting all 189,668 of Viator & Vektor's shares, but will
be considered successful if at least 58,043 of the shares are acquired. This would bring
Vektor's and Petin's stake to 51%.
Whereas Petin holds 20% of Viator & Vektor, which is not listed on the stock exchange,
Vektor owns no shares of the group as yet.
Vektor, headed by Vekoslav Sket, was established by Petin and by 48 current and former
managers at Viator & Vektor and affiliated companies.
Petin on the other hand only has one owner, the CEO of the Viator & Vektor group Zdenko
Pavcek.
The bid is to be carried out on the basis of a shareholder agreement, signed by Vektor and
Petin on 7 November, which also stipulates that the acquired shares are to be divided equally
among the two companies.
According to a press release from Vektor and Petin, the main motives behind the move are
increasing the influence on the company's operations and development goals, and the belief
that an MBO could have a positive effect on the growth of the company.
In addition to Petin, the biggest shareholders of Viator & Vektor include asset management
firms Infond Holding (24.8%), Zlata Moneta 2 (19.6%) and Proholding (13%).
Ibiko Gives Up Acquisition Plans for Sava for Now
A small real estate management company has pulled back from its bid for conglomerate Sava
A small real estate management company has pulled back from its bid for conglomerate Sava,
saying it has not been given the chance to carry out due diligence to establish the realistic
price of the share.
Ibiko said it would not publish an acquisition bid upon the deadline on Wednesday, 22
November, by which the company should do so after it made the announcement a month ago
it would be offering SIT 49,500 (EUR 206.56) per share, making Sava worth around SIT
85bn (EUR 354.7m).
23
Sava has topped SIT 53,000 (EUR 221.17) on the Ljubljana Stock Exchange in the past
month. Ibiko told STA that a higher bid could be made only on the basis of due diligence of
the company's operations. Sava has been posting very good results over the past few years,
which pushed up the price of its shares.
Nevertheless, the Slovenjske konjice-based Ibiko and its owner, financial mogul Franc
Gajsek, do not intend to give up on the takeover as yet, as they want to persuade foreign
investors interested in Sava to offer a higher price. They will also decide on whether to
request due diligence, Ibiko officials told STA.
Under the takeover act, Ibiko can now not publish another acquisition bid for Sava within a
year. This is not a problem for the company, which says it would buy more than 25% in the
case of a takeover. In this case the law binds them to publish a bid.
While Ibiko is uncertain as to when Sava may expect a takeover bid, the Kranj-based
conglomerate hopes to be rid of Gajsek's intentions for at least a year. The company's
management has told STA that Sava allows only serious buyers to carry out due diligence, a
process that gives prospective buyers access to all of the company's books, records and files.
Sava officials say that the company has had no talks whatsoever with Ibiko or Gajsek and "his
mysterious" foreign partners. Only when such talks are conducted and when the prospective
buyer of a majority stake proves to be serious, it is common for a company to give an insight
into its books, which is an important factor in determining the takeover price.
The management of Sava and stock analysts had more or less expected such an outcome,
given the low takeover price. What is more, Gajsek, who owns 0.27% of Sava, had announced
acquisition of a more substantive stake in the company in the past, but he never carried it out.
It is true that Ibiko has been recently purchasing Sava shares, but the stake remains
insignificant.
Sava, a conglomerate made up of 30 companies in the chemical, tourism, real estate and
investment sector, generated revenues of SIT 18.5bn (EUR 77.2m) in the first half of this
year. Its net half-year profit stood at SIT 2.7bn (EUR 11.3m).
Its main stakeholder remains the state-run Pension Fund Management (KAD) with 18.71%,
followed by investment fund NFD 1 (11.93%), the state-run Restitution Fund (SOD, 11.06%),
asset management firm NFD Holding (8.32%), beverage company Radenska (6.64%) and
asset management company Zvon 1 (4.32%).
Ibiko last year reported revenues of SIT 66m (EUR 275,000) and a profit of SIT 4.3m (EUR
18,000).
Appellate Court Upholds Permission for Krka's Zyllt in Poland
Zyllt is an anticoagulant that reduces the possibility of strokes, heart attacks, clots in the leg
arteries and death from coronary artery disease
An appellate court in Warsaw has upheld the decision of the District Court to reject the
motion of the French pharma company Sanofi Pharma BristolMyers Squibb SNC for a
temporary injunction of the sale of the drug Zyllt, which is made by Slovenia's Krka, in
Poland.
The French company had claimed that Krka Polska had unlawfully acquired the permit to
market the drug in Poland, Krka said in a press release on Wednesday, 22 November.
Zyllt is an anticoagulant that reduces the possibility of strokes, heart attacks, clots in the leg
arteries and death from coronary artery disease.
Telco Increases Revenues, Profit in First Nine Months
The Telekom Slovenije group generated SIT 128.2bn (EUR 535m) in revenues in the first nine
months of 2006
24
The Telekom Slovenije group generated SIT 128.2bn (EUR 535m) in revenues in the first
nine months of 2006, up 5% over the same period last year. Net profit was 6% higher at SIT
17.6bn, (EUR 73.44m), the company said on Wednesday, 22 November.
The group's press release states that the telco sold over 60,000 subscriptions in the first nine
months of 2006, 40,000 of them ADSL, even though Slovenia is among the most developed
fixed telephony markets in the EU.
The parent company Telekom Slovenije saw its profits soar, from SIT 9.2bn (EUR 38.4m) to
SIT 20.2bn (EUR 84.3m). However, the company paid out SIT 10.5bn (EUR 43.8m) in
dividends to the shareholders of its subsidiaries, so the sum is not booked in the group's
consolidated net profit.
The company's subsidiaries also published upbeat results, with mobile operator Mobitel
upping its net profit by 27% to SIT 7.8bn (EUR 32.5m) in the January-September period on
revenues that rose by 8% to SIT 70.6bn (EUR 294.6m).
The group's results, which also includes Slovenia's largest mobile operator Mobitel and the
country's biggest ISP Siol, were assessed by the group's supervisory board on Tuesday, 21
November as successful.
Chamber of Commerce and Industry of Slovenia Gets Interim President
Samo Hribar Milic, the head of the Employers' Association, will be the interim president until
a full-time head is elected in mid-2007
The members of the Chamber of Commerce and Industry of Slovenia (CCIS) on Wednesday,
22 November dismissed the long-time president, Jozko Cuk, in what is the latest development
in the ongoing transformation of the CCIS to a voluntary association.
Samo Hribar Milic, the head of the Employers' Association, will be the interim president until
a full-time head is elected in mid-2007. Hribar Milic was the CCIS vice-president until
August 2002.
The CCIS assembly also confirmed the new articles of association, which provide for a new
system of chambers of commerce and allow groups of companies to split from the CCIS and
form their own local or industry-specific chambers.
Cuk, who was in charge of the CCIS for 14 years, said the chamber was successful in this
period, as it has gone through profound political and economic change.
The new CCIS head meanwhile said his priority would be to offer services that will attract
members. The chamber would adhere to the "customer is king" policy.
Hribar Milic also announced the strengthening of ties between the CCIS and the Employers'
Association over social dialogue, and lower membership fees than initially planned.
Iskraemeco Hopes to Get New Ownership in 2007
Iskraemeco, a Kranj-based producer of electric meters, is to be put up for sale in next year,
hoping to attract a strategic partner
Iskraemeco, a Kranj-based producer of electric meters, is to be put up for sale in next year,
hoping to attract a strategic partner, according to its chairman, Janko Steharnik.
In an interview for the daily Finance on Thursday, 23 Novembers, Steharnik said Iskraemeco
recently received a capital injection worth SIT 2.75bn (EUR 11.48m) from the company
majority owners.
Steharnik told the business daily this would be sufficient for the company's rehabilitation,
while future profit and debt repayment would have to rely on new resources.
Due to consolidation in the industry, Iskraemeco needs a strategic partner if it wants to
survive in the long run. According to Steharnik, potential buyers include multinational
Actaris, Bayard, and certain Chinese companies targeting European markets.
25
Steharnik estimates that this year Iskraemeco will make EUR 95m in revenues, with about
EUR 4m in loss. "We have enough orders to cut the number of employees by a further 70, as
opposed to 100 envisaged in the financial reorganisation plan."
The company is going to reduce the number of employees in the production of electric meters
by 300 to 400. "Under the reorganisation plan, a part of the production will be sold, while the
buyer will take over the machines and employees. However, negotiations are still under way."
Regarding the repayment to creditors, Steharnik said that the banks could turn their claims
into ownership stakes, while other creditors would be offered the option of early repayment,
given a discount.
Krka Banned from Selling Zyllt in Serbia again
Slovenian drug maker Krka has again been banned from importing and selling its
anticoagulant Zyllt in Serbia
Slovenian drug maker Krka has again been banned from importing and selling its
anticoagulant Zyllt in Serbia. The Commercial Court of Novi Sad ruled that the sale of Zyllt
in Serbia constitutes an infringement of the plaintiff's patent that protects the active ingredient
clopidogrel in the hydrogen sulphate salt form, which is also an ingredient of Zyllt.
The motion for the ban on sales was brought by French pharma company Sanofi Aventis,
which holds the patent, against Krka and its Serbian subsidiary Krka Farma Novi Sad. Krka
said in a press release on Thursday, 23 November that it would lodge an appeal.
Krka has already filed a request to revoke the disputed patent, claiming that the patent was
awarded against the provision of the patent law in force at that time.
Considering the sales of Zyllt in Serbia, the verdict will not have a significant negative impact
on the business, Krka said.
The verdict comes after the Novi Sad Commercial Court re-issued a temporary injunction on
the imports and sales of Zyllt in early November. The court had already issued an injunction
in June, but its decision was overruled by the Higher Commercial Court in Belgrade in July.
Motorway Company Gets Go-Ahead for EUR 300m EIB Loan
Parliament passed in emergency procedure an act on approval and state guarantee for a
EUR 300m loan that the Slovenian Motorway Company (DARS) is to take out with the
European Investment Bank (EIB)
Parliament passed in emergency procedure on Thursday, 23 November an act on approval and
state guarantee for a EUR 300m loan that the Slovenian Motorway Company (DARS) is to
take out with the European Investment Bank (EIB).
The loan will facilitate the construction of motorway sections between Pluska and Ponikve,
Ponikve and Hrastje, Sentvid and Koseze, Slivnica and Drazenci and Vrba and Peracica.
The money for these sections had been secured with two separate acts that were adopted in
2005 and this year.
However, the new act allows DARS to get the necessary money under more favourable
conditions from EIB.
Funds approved under the previous state guarantees (loans would have been taken out from
commercial banks) will be cut accordingly.
This is the eights act on state guarantees for loans that DARS will get from EIB.
Mobitel Introduces Single-Tier Management Structure
Mobitel, Slovenia's leading mobile operator, will introduce a single-tier management
structure with an eight-member board of directors based on a decision reached by the
company's general meeting
26
Mobitel, Slovenia's leading mobile operator, will introduce a single-tier management structure
with an eight-member board of directors based on a decision reached by the company's
general meeting on Wednesday, 22 November.
Once the board is in place, the directors will elect two executive directors among their ranks.
The new board is expected to start working in the first quarter of next year, Telekom
Slovenije, the sole owner of Mobitel, said in a press release on Friday, 24 November.
Mobitel is currently in the hands of the chief executive of the parent company, Bojan Dremelj.
He was assigned to do the job after the dismissal at the end of May of Mobitel boss Anton
Majzelj.
The choice of single-tier management structure is a novelty in Slovenia. It was introduced by
the new companies' act, which entered into force on 4 May.
By far the largest wireless operator with a 72% market share, Mobitel increased the number of
subscriptions by 2% so far this year.
Operating revenues were up 8% year-on-year in the first nine months, to SIT 70.6bn (EUR
294.6m), with net profit soaring by 27% to SIT 7.8bn (EUR 32.5m).
Steel Group's Posts EUR 15.5m in 9-Month Profits
The Slovenian Steel group posted SIT 3.7bn (EUR 15.5m) in net profits in the first nine
months of 2006
The Slovenian Steel group posted SIT 3.7bn (EUR 15.5m) in net profits in the first nine
months of 2006, down a third over the same period last year, when profit stood at SIT 5.6bn
(EUR 23.4m).
The drop in profits comes after last year's bumper results, buoyed by a surge in global steel
prices.
However, the company upped volume sales by 13% and revenues by 17.5% in comparison
with the same period last year.
The results, released on Friday, 24 November, were also discussed by the company's
supervisory board on Thursday, 23 November.
The supervisors also confirmed the company's strategy until 2012 which calls for a
continuation of investments in specialty steels production. Investments are to top EUR 330m.
The company plans to generate revenues to the tune of SIT 130bn (EUR 542.5m) by the end
of the year and post a net profit of SIT 5bn (EUR 20.9m).
A public call for bids for the acquisition of a 55.35% stake in the group meanwhile expired on
Monday, 20 November.
The privatisation commission got three bids, but it did not disclose the names of the bidders.
The commission will start with negotiations after poring over the bids, with the decision to be
made by 20 February 2007.
Port Operator Luka Koper Ups Revenues, Profits
Luka Koper, the operator of Slovenia's sole seaport of Koper, posted an operating profit of
SIT 3.4bn (EUR 14.2m) for the first nine months of 2006 on operating revenues of SIT 17.3bn
(EUR 72.2m)
Luka Koper, the operator of Slovenia's sole seaport of Koper, posted an operating profit of
SIT 3.4bn (EUR 14.2m) for the first nine months of 2006 on operating revenues of SIT
17.3bn (EUR 72.2m). The company's operating profit increased by 10% and revenues by 15%
year-on-year.
The port operator's transhipments stood at 10.4 million tonnes in the period, 5.2% above plans
and 9% more than last year, the company said on Friday, 24 November.
The port operator also stressed the increase in transhipment of containers and cars, by 17%
and 20%, respectively.
27
The results were also discussed by Luka Koper's supervisors.
Sugar Factory CEO Says Biofuel Production in National Interest
Jurij Dogsa, the CEO of sugar factory Tovarna sladkorja Ormoz, believes his company could
switch from producing sugar to bioethanol
Jurij Dogsa, the CEO of sugar factory Tovarna sladkorja Ormoz, believes his company could
switch from producing sugar to bioethanol. The factory's goals should moreover be in the
state's interest, Dogsa said in Maribor on Thursday, 23 November.
Presenting the project at the seminar on alternative fuels in Slovenia, Dogsa added that the
factory would have to undergo a EUR 35m reconstruction, which would allow 50 workers to
produce 50,000 cubic metres of bioethanol a year.
This would require 133,000 tonnes of wheat and corn, with 40% of the resources coming from
Slovenia and the rest from abroad, he revealed. A side product would also be 40,000 tonnes of
corn grit, used for fodder.
Dogsa pointed out that other types of production will have to be sought as well if they want to
keep the jobs of the 197 currently employed in the sugar factory.
"Even though biofuels are still more expensive than fossil fuels, their consumption is rising
rapidly...The state should create favourable conditions for the industry, and the agriculture
should seize the chance," he said.
Slovenia's sole sugar factory will stop producing sugar from sugar beet in 2007, after a 2005
EU-wide sugar reform made sugar production in Slovenia unprofitable.
Erjavec: Elan Could Give More Focus to Army Equipment
Erjavec and the representatives of Skimar, the parent company of the Elan Group, talked
about the possibilities of producing a type of skis for the military which would set the
standard in NATO countries, supplying Elan's products to allies, and vessel production for
the demands of the Slovenian Armed Forces
Defence Minister Karl Erjavec visited ski equipment manufacturer Elan on Friday, 24
November and discussed its potentials in production of military equipment for Slovenia and
the rest of NATO.
Erjavec and the representatives of Skimar, the parent company of the Elan Group, talked
about the possibilities of producing a type of skis for the military which would set the
standard in NATO countries, supplying Elan's products to allies, and vessel production for the
demands of the Slovenian Armed Forces.
The company is known for dedicating a good deal of money to technological development
thereby securing its position among innovative companies. This know-how could be put into
development of military equipment, said Igor Umek, CEO of Skimar, and Elan board
member, Matjaz Sarabon.
This would also enable Elan to take part in NATO's tenders, as the company fulfils the
standards of the Slovenian Armed Forces, as well as the standards of NATO, claimed Erjavec
during his visit to company in Begunje na Gorenjskem.
Sarabon said that good opportunities also lie in development of advanced materials,
considering Elan's previous experience in the military sphere. "Elan is already present on the
Scandinavian markets, while counter purchases could increase its sales even further," added
Sarabon.
Elan and the Defence Ministry are currently working together in equipping the national
martial arts centre, which is to be constructed in Kranj (north) by mid-2008, and a military
testing ground in Murska Sobota (NE).
Erjavec also looked at Elan's nautical programme and said he was surprised at its rapid
development. He also assured that the management of the Slovenian Armed Forces would
28
shortly visit the company in order to assess the possibility of military boat production in the
company.
In the past two years, Elan's contracts with the army totalled EUR 458,300.
29
FAIRS, CONGRESSES
Slovenian Book Fair to Stage Visitors' Forum This Year
The fair will officially start with an award ceremony at the Cankarjev dom arts centre on 28
November, while it will be open to the general public from 29 November to 3 December
The Slovenian Book Fair, the annual get-together of Slovenian publishers, booksellers,
authors and readers, will get under way this week, introducing a new in a line of events - the
Visitors' Forum, modelled after the Frankfurt Book Fair.
The fair will officially start with an award ceremony at the Cankarjev dom arts centre on 28
November, while it will be open to the general public from Wednesday, 29 November, to 3
December.
Presenting the programme of the 22nd fair, the organisers said the Visitors' Forum would
feature a number of workshops on digital photography, aromatherapy, as well readings for
children, music performances and film shows.
Mitja Zupancic of the fair's management board said the event would showcase Croatian
publishers, following the recent presentation of Slovenian literature at the Interliber Book Fair
in Zagreb. The organisers hope to attract publishers from abroad so as to give the fair more
international outlook.
The event will also feature traditional debates hosted by publishers to discuss topics as diverse
as censorship in Serbia, blogs as e-literature, the history of God and Kabala, and the Kumran
Manuscripts.
According to Miha Kovac, who is responsible for lectures by publishers, Juraj Heger of
Bratislava will talk about publishing in Slovakia, while Ruediger Wischenbart of Vienna will
present a project to make the literature of small nations more accessible to the world book
market. Francoise Dubruille of Brussels will meanwhile discuss new trends in book selling.
Since Norway celebrates the year of Henrik Ibsen, the fair will also feature an exhibition
showcasing first editions of his major works and his influence on Slovenian authors.
30
SLOVENIA IN BRIEF
Slovenia and Bulgaria Agree Cooperation in Home Affairs
Interior Minister Dragutin Mate and his Bulgarian counterpart Rumen Petkov have agreed to
set up a joint commission that would draw up annual cooperation plans. Minister Mate told
STA that the agreement was reached during the talks in Sofia on Monday, 20 November.
EU Troika Justice Ministers Determine Presidency Priorities
Justice Minister Lovro Sturm has met his Portuguese and German counterparts in Lisbon to
coordinate the working programme of their countries' 18-month presidency over the EU in the
domain of justice. Strum, Portugal's Filip Costa and Germany's Brigitte Zypries, who met in
Lisbon, agreed on three priorities in justice, the Interior Ministry said in a press release on
Monday, 20 November.
PM Stresses Importance of Social Dialogue
Prime Minister Janez Jansa discussed on Tuesday, 21 November social dialogue with
representatives of trade unions. There is great interest for social dialogue in Slovenia but it is
important to keep the ability for compromise in social agreement talks, Jansa told the press
after the meeting.
Parliament Speakers Protest against Schengen Delay
Slovenian Parliament Speaker France Cukjati told STA on Thursday, 23 November that
participants of a regional conference of parliament speakers in Vienna expressed in a written
statement their indignation over the delay in the expansion of the Schengen border-free zone.
31