New CEO wants to transform BKV into holding, privatize some units

Kocsis, who earlier headed the Hungarian Electricity Works (MVM) and the Paks Nuclear Power Plant, was appointed CEO of BKV by the Budapest City Council on Wednesday. Though the city council should keep its majority stake in the company, the capital’s district councils ought to be offered shares in BKV. Private public transportation companies in the capital should also be allowed to acquire the shares, Kocsis said in his application. Minority stakes in the new units, on the other hand, should be offered to financial investors who could help solve financing problems, he said.

Kocsis noted BKV projects losses of Ft 15 billion in 2008, a slight improvement over losses of Ft 17 billion in 2007. It sees year-end liabilities of Ft 82 billion, including loans of Ft 74 billion. BKV projects annual losses will grow to more than Ft 20 billion by 2010. Liabilities will reach more than Ft 95 billion, including loans in excess of Ft 90 billion.

Kocsis suggested BKV replace its current stock of loans with a bigger syndicated loan. The company should also consider a bond issue. He noted that BKV’s debt had not been consolidated since 2002 and added that the it must make capital expenditures of at least Ft 30 billion a year if it is to keep up its fleet of 3,000 vehicles.

Though BKV has net assets of Ft 103 billion on the books, based on an analysis of available data, Kocsis put the company’s value at Ft 73.7 billion. Kocsis proposed BKV sign a mid-term contract with the city council linking the company’s financing to its performance. (MTI-Econews)