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Shortfall as state sells off the farm

Hungary’s National Asset Management Company (MNV) will auction minority state-owned stakes in 30 companies on January 27. The move is in line with MNV’s legal obligation to dispose of all state-owned minority stakes by the end of 2008, or at least prepare the sales process by then.

“The forthcoming auction will be the third one after two successful rounds held last June and October,” said Gábor Száraz, spokesman of the MNV. “The revenue from the sales is used to lessen Hungary’s state debt.” In the forthcoming tender, the highest asking price has been set at HUF 385 million, for a 41.67% stake in KÖTIVIÉP B Central Tisza Region Water Works and Telecommunications Kft. Next in the line is a 0.59% stake in Mátra Power Plant Zrt, which will be offered for HUF 340 million.

The MNV has about 100 companies in its portfolio. According to Száraz, the sales procedures respects pre-emption rights registered in the company charters: in practice this means that the party holding the preemption right can buy the stake at the highest price achieved at the auction; if the preemption right is not exercised, the MNV can sell the stake to the bidder.

In some cases the MNV may decide to hold open tenders instead of an auction. This was the case with a 25% plus one vote stake the MNV held in National Textbook Publishing Zrt: the asking price was HUF 250 million, and the stake was finally sold to NTK-Perfekt Zrt for HUF 1.7 billion. “For each company, the asking price is determined by professional valuators,” Száraz said. “In many cases, however, we manage to get many times the asking price.”

According to preliminary figures, the MNV closed 2008 with revenue of HUF 84 billion, well under the HUF 115 billion original target because of a decision to postpone a HUF 30 billion sale of land for the planned government quarter that was shelved last January, MNV CEO Miklós Tátrai said in December. The other reason for the shortfall was the Government’s decision to put off the planned sale of minority state-owned stakes in OTP Bank, FHB Bank and Richter Nyrt because of low share prices.

“The MNV planned to sell these stakes last year via the stock exchange, but the Finance Ministry decided that the sales should be postponed until share prices have recovered,” Száraz said.

MNV expects to take in revenue of HUF 8 billion-10 billion in January 2009 from contracts signed in 2008. MNV targets total revenue of HUF 210 billion in 2009, though HUF 94 billion of this was to have come from the New Ownership Program, a scheme to sell stakes in state-owned companies to private and professional investors that was suspended because of the global financial crisis. (BBJ)