A cabinet meeting on Wednesday approved the sale of a 42% stake in troubled holding company Transelektro by the Hungarian Development Bank Rt (MFB), business daily Világgazdaság reported on Thursday.
The decision clears the way for the sale of Transelektro's energy unit and its transformer unit to India's Crompton Greaves. Reports in the Indian press on Wednesday said Crompton Greaves had agreed late Tuesday to purchase Ganz Transelektro Villamossági Rt (GTV), which exercises ownership rights over Transelektro's holdings, and transformer planning unit Transvertikum Kft for €35 million (Ft 9.5 billion).
Világgazdaság reported that an extraordinary shareholders' meeting of GTV made new appointments to the board Wednesday evening, reflecting the company's new ownership structure. Beside MFB, GTV is owned by Transelektro Management Kft, a company held by Vegyépszer Zrt (48%), Közgép Rt (9.33%), Resonator Kft (19.33%) and Transelektro's former owner Péter Székely (23.34%).
In addition to the purchase price, Crompton Greaves, which is making the transaction through its Belgian unit, will take over a part of GTV's Ft 62 billion in debts, some at a discount. According to Világgazdaság, Crompton Greaves would pay back to MFB the Ft 7.5 billion GTV owes the bank, as well as a further Ft 3 billion GTV owes a consortium of commercial banks which participated in a state-organized bailout of the company earlier in the year. Crompton Greaves will take over at a discount other debts GTV owes to commercial banks, which are not backed by guarantees. It will pay back some of these loans in cash. GTV loans from commercial banks backed by guarantees will be paid back in full by Crompton Greaves. Crompton Greaves will take over GTV's liabilities to suppliers, also at a discount, and pay them back in cash. The Indian company will also pay GTV's back taxes.