Bábolna in talks of exchanging debt for stake in Zalabaromfi
Monday, May 15, 2006, 14:50
State-owned agricultural company Bábolna Rt might obtain a stake in struggling poultry company Zalabaromfi Rt in a debt-for-equity swap, business daily Világgazdaság reported on Monday.
Zalabaromfi, which is a member of the Carnex group, owes Bábolna nearly Ft 1 billion. Carnex spokesman Péter Zoltán confirmed negotiations are underway with the company's suppliers, including Bábolna.
Világgazdaság cited unnamed sources who said Zalabaromfi suppliers will get the company for the price of taking over its debts. Carnex owns 50.6% of the company, with Pannonmill Rt holding a 25%-plus-one-vote stake and the rest owned by suppliers and management. Zalabaromfi, with annual turnover of Ft 16 billion-Ft 17 billion, has accumulated debts of Ft 4.5 billion to suppliers and Ft 14.7 billion to banks, say its suppliers.
There are also talks underway at another Carnex poultry company, Békéscsaba Poultry Rt, on a similar debt-for-equity swap. The latter company recently announced its insolvency after taking on debts of Ft 2.5 billion.
Holding company Carnex, once Hungary's biggest poultry producer and its second-biggest meat processor, is near collapse, industry insiders told Világgazdaság. Although Carnex attributes its troubles to the bird flu scare and the government's failure to react quickly enough with subsidies for the industry, the company's suppliers say its owners have been taking cash out of the business.
Carnex generated annual revenue of Ft 140 billion-Ft 150 billion in 2004, leading the poultry market and second only to Sándor Csányi's Délhús Rt on the entire meat market.