Business
STA, 30 December 2019 - The Ljubljana Stock Exchange had a bullish year, with the SBI TOP benchmark index adding 15.2% from the start of the year until the last trading day on Monday. Market capitalisation of all listed papers increased by 3% to EUR 34.9 billion.
The SBI TOP closed the year at 926.1 points, just shy of its annual peak achieved on 16 December. The lowest level this year was recorded on 4 January, when it stood at 801.5 points, stock exchange operator Ljubljanska Borza said on Monday.
Volumes were roughly on par with last year's, at EUR 329.5 million, with shares, whose market capitalisation stood at EUR 7.1 billion at the end of the year, accounting for roughly 90% of all deals.
Pharma company Krka remained the most coveted share with volumes of nearly EUR 92 million excluding block deals, followed by NLB bank with EUR 35.2 million and insurer Zavarovalnica Triglav with EUR 32 million.
At the end of the year, a total of 72 securities were listed on the stock exchange.
STA, 30 December 2019 - Three companies that form the heavily indebted retail group Tuš have entered preventive financial restructuring, show filings with the Agency for Public Legal Services (AJPES) released on Monday.
The restructuring for the holding company Tuš Holding, its retail arm Engrotuš and its real estate arm Tuš Nepremičnine was initiated by the Celje District Court at the request of the companies themselves.
Tuš said the new procedure had been initiated with the support of a majority of financial creditors since the existing master restructuring agreement, which was signed in early 2016, will soon expire.
"The purpose of the procedure is to give Tuš group companies a sustainable equity structure in the long term and provide financial stability," the company said in a press release.
Preventive restructuring is a special procedure in insolvency law that may be invoked when a company is not yet insolvent but might become insolvent. Even if it fails, the procedure does not necessarily mean the company will enter bankruptcy.
The Tuš group, which remains in ownership of founder Mirko Tuš, has been working through its mountain of debt for several years and banks, which extended loans worth roughly EUR 300 million, have recently started to sell their claims to funds specialising in distressed assets.
Media reports suggest that roughly a third of claims to Tuš is held by EXP Investments Securitisation from Luxembourg and Slovenian asset manager Alfi, which are in the process of buying another 20% or so of the claims.
British fund Anacap Financial Partners holds under a tenth of the claims and Abanka about 21%.
Engrotuš, the core company in the group, reported net revenue of EUR 480.4 million for 2018, roughly on par with the year before. Net profit was down 71% to EUR 1.7 million.
STA, 31 December 2019 - Geothermal energy was long seen as a promising source of renewable energy, in particular in eastern Slovenia where geothermal potential is highest, but since the introduction of licence fees for geothermal exploitation in 2016, uptake has been stagnating. High licence fees are not the only issue, businesses also complain about onerous rules.
Geothermal energy - essentially water that is heated deep within the Earth's crust and then pumped to the surface - is not officially designated as a renewable source, even if the EU treats it as such. And licence fees for exploitation are also paid by users who only take the heat and then return the cooler water into nature, businesses say.
Several businesses in eastern Slovenia have urged the government to change the rules to designate geothermal energy a renewable resource, or to subsidise the construction of re-injection wells through which water is pumped back below ground after its heat energy has been harvested.
The Environment Ministry says that all EU countries must comply with provisions of the Water Directive which stipulates that businesses must pay for water use, adding: "There is no method at EU level as yet that would regulate compliance with this commitment in a uniform way."
However, the Infrastructure Ministry already treats geothermal energy as a renewable resource and said all measures must be coordinated at government level; exploitation of geothermal will even be promoted in the forthcoming National Energy and Climate Plan.
As for the abolition of fees for water that can be re-injected, the Environment Ministry says that water is subject to licence fees just like any other natural resource. The Infrastructure Ministry, on the other hand, already recognises certain exemptions for re-injection of thermal water, and the Economy Ministry says that the base for calculating the licence fee had been reduced for 2020 to benefit business.
But the variable nature of this base for calculations, called quotient D, is proving a major obstacle for businesses wanting to exploit geothermal energy.
One of the biggest such firms, Ocean Orchids, says this is problematic since quotient D can change at any time. "We simply cannot calculate the return on investment in a re-injection well over a ten-year period, which is why no bank wants to finance this," Ocean Orchids director Roman Ferenčak says.
As a result, the company, which had originally built its business around heating its greenhouses with cheap geothermal energy, no longer sees a business case for geothermal.
"We're at a point where the state will accept us emitting thousands of tonnes of additional CO2 into the atmosphere, even though the Infrastructure Ministry has a bill in the works that says all businesses must reduce fossil fuel use every year. Adding to that, the state subsidises the burning of gas in co-generation," he says.
Paradajz, a company which grows greenhouse tomatoes not far from Ocean Orchids, has a similar problem and says their production costs have almost doubled because of government policy.
The company build a geothermal well in 2011 for a million euro and invested another million in additional equipment since the introduction of water fees in 2016, but they cannot build a re-injection well because it is impossible to calculate how much it will end up affecting their bottom line.
"All these measures - licence fees, electricity costs and monitoring exercises prescribed by the state - have upended the cost-benefit ratio of geothermal. We can no longer speak about an economically favourable source of heating," Paradajz spokesman Kristijan Magdič says.
Analyses conducted by several agencies, including the Geological Survey, in the framework of the cross-border project Darlinge suggest Slovenia's geothermal potential is significant but poorly exploited. At present only 123 GWh of geothermal energy is harvested, with potential available energy twenty times as high.
STA, 26 December 2019 - Although Ljubljana Jože Pučnik Airport has lost its biggest client, carrier Adria Airways, this year, operator Fraport Slovenia is confident that the business hub around the country's biggest airport will continue to grow in the coming years.
Two big cargo hubs opened this year, while Fraport Slovenija has launched the construction of a new passenger terminal, which is set to open before Slovenia's EU presidency in the second half of 2021.
The EUR 21 million investment follows years of passenger growth, with the total number of passengers exceeding 1.8 million last year. But shortly after construction started, Adria Airways went into receivership.
Slovenia's former flag carrier transported the bulk of its passengers through Ljubljana. But after the initial plunge in flights and passengers this autumn, other carriers have stepped in and restored most major routes.
"Traffic is picking up just as forecast. We are not building the terminal only because of passenger growth but also because we want to improve the standard and the quality of our service," Fraport Slovenija has said.
Apart from the new terminal, the operator is going forward with a host of other investments, worth a total of EUR 40 million. This includes utilities and roads in the growing Ljubljana Airport City, an area covering some 15 hectares.
"When you enter the airport, the first thing you notice is the growing Brnik Business District. TNT Express Worldwide, Cargo-partner and Kuehne + Nagel have already set up their own logistics hubs here," Fraport said.
UPS Adria (S) Ekspres is building a logistics facility as well, and Iskra Mehanizmi and SchäferRolls are building their facilities here, the operator added.
More than half of the plots are or will shortly be under long-term lease, while some of the bigger plots are still available, said Fraport.
It added that the fast-growing number of routes, following Adria Airways receivership, is restoring investor trust.
STA, 27 December 2019 - Agrokor, the owner of retailer Mercator, has turned to the EU to complain about the seizure of Mercator stock by the Slovenian Competition Protection Agency which it says is motivated by "national political reasons".
In a letter to Competition Commissioner Margrethe Vestager and director general of the Commission's directorate general for competition Cecilio Madero Villarejo and the leaders of anti-trust authorities across the EU, Agrokor lays out the recent procedures involving Mercator stock, which it says are contrary to EU and Slovenian law.
The letter comes after the Slovenian anti-trust watchdog seized Agrokor's nearly 70% holding of Mercator shares because Agrokor broke the law by failing to notify the agency of the takeover of Slovenian water bottling company Costella three years ago.
Agrokor was initially fined EUR 54 million, but the agency later decided to seize the shares as a way to ensure that the fine is paid.
Agrokor claims the share seizure is "unconstitutional, arbitrary and illegal," and in the letter to the EU authorities Agrokor chairman Fabris Peruško says that the Slovenian government is using the Costella fine as an excuse to prevent Mercator stock from being transferred from the bankrupt Agrokor to the newly-established entity, Fortenova.
"The agency has exploited this fine as an excuse to seize 69.9% of Mercator... These procedures run contrary to Slovenian national law and practice, as well as EU law and constitute a violation of international law," he says.
STA, 27 December 2019 - Bank NLB and Belgian KBC, NLB's former owner, have sold their life insurance company NLB Vita to the country's second biggest insurer Sava Re. The sale means that NLB has met the last of several conditions upon which the European Commission approved the 2013 bailout.
The cost of the deal, signed on Friday, has not been disclosed, but the business paper Finance recently reported that NLB and KBC expected to get between EUR 20 million and EUR 30 million.
Established by NLB and KBC in 2002, NLB Vita is the largest life insurance company in Slovenia, holding 14.8% of the market.
The sale is to be completed by the end of the first half of 2020, pending regulatory approval and suspensive conditions, said a press release issued by NLB and Sava Re.
"This will be the final step on our way to meeting all of the obligations imposed by the European Commission and a vital milestone, because we will be able to do business and show our full competitive potential," NLB chairman Blaž Brodnjak was cited as saying in the press release.
"We believe we have found the right strategic partner for NLB Vita, one to continue its story of success," Brodnjak said.
Sava Insurance Group chairman Marko Jazbec believes that the combination of knowledge and experience from KBC and NLB in NLB Vita provide a solid foundation for future development of a strong partnership with Sava in banking insurance.
He sees the acquisition as a key step for Sava to solidify its position in the life insurance market in Slovenia. "The share of life insurance premiums in terms of GDP is lower in Slovenia than in other, more developed European markets, therefore we see potential for development and organic growth for the future."
Ex-Yu Aviation reports that the Slovenian government is planning to support connections with the capital by subsiding flights between Ljubljana and Frankfurt, Munich, Zurich and Brussels, all key hubs served by the Lufthansa Group. The subsidies would increase the frequency on these routes, and to some extent make up for the loss in services due to the collapse of Adria Airways. Talks have said to have been held with three unnamed European regional carriers, with more news on the plans expected in the new year.
STA, 20 December 2019 - Slovenia's forest management is facing a number of challenges due to severe windstorms increasing in intensity and frequency, a consequence of climate change. This year's extent of related damages has been the greatest so far, with experts urging adapting forest management to global warming.
Related: Ljubljana Predicted to Be World's Fastest-Warming City
The bark beetle outbreak and spread, caused by the 2017 and 2018 windstorms, posed another threat, forcing the government to declare a natural disaster this year.
Slovenia is one of the most heavily forested European countries - forests cover more than 58% of the country, with 20% of woods being state-owned.
The annual forest increment has been nearing 9 million m3 of trees. Meanwhile, last year's allowed felling amounted to 6.8 million m3.
More trees had to be felled in the recent years, partly due to clean-up efforts resulting from windstorm damage.
After the 2014 ice storm, causing damage to more than 9 million m3 of trees, bark beetle poured gasoline on the fire and devastated more than 8 million m3, while windstorms wreaked havoc on some 3 million m3 of trees.
Since 2014, forest rangers have had to fell almost 18 million m3 of trees. Clean-up felling has accounted for at least half of all cutting down in the past years.
During winter, such removal efforts need to go on since the majority of bark beetles overwinter in adult development stages and have to be decimated during the wood removal and processing.
"Nature-friendly, sustainable and multi-purpose forest management as developed in Slovenia in the past 50 years is an effective framework for responding to climate change," said the Slovenian Forest Service.
One of the main future challenges in the field will be adapting tree species. The spruce is the most endangered one, with its share decreasing in areas unfit for its growth. On the other hand, the beech tree acclimatises more easily, which is reflected in its share being on the rise.
However, the experts believe that the beech tree will stop flourishing due to climate change as well, with the oak and other deciduous trees thriving in warm climate.
Whereas global warming has a negative impact on forests, trees play a major role in mitigating climate change since use of wood and wood products is beneficial for balancing out carbon emissions, maintaining the ability of forests to store carbon and introducing renewable materials and energy sources.
Strengthening Slovenia's timber supply chain is thus essential. The country exports some 4 million m3 of timber a year, which then becomes value-added wood abroad.
The target is to process at least 5 million m3. The Slovenian State Forests company plans to set up four centres for collecting and processing wood across the country.
STA, 18 December 2019 - The Competition Protection Agency (AVK) has temporarily seized 70% of Mercator shares from its owner, Croatian group Agrokor. The move is to ensure that Agrokor pay a EUR 53.9 million fine the agency imposed in September after Agrokor failed to notify it of its 2016 takeover of Slovenian bottled water company Costella.
The agency decided to seize the shares on Monday, according to Wednesday's press release from Fortenova group, the successor of Agrokor which is in the process of taking over Agrokor's viable businesses, as Agrokor is buried under a massive loan debt.
Fortenova says that the anti-trust agency does not have the power to seize the shares, arguing such a move should have been made by a court.
The agency meanwhile responded by saying that the decision is not yet final and that it can be challenged with an appeal.
It cited on its website the regulation on which it based the decision, but could not comment any further, as the procedure is ongoing.
Economy Minister Zdravko Počivalšek said he believed that the agency was acting in line with rules and legislation, while again rejecting speculations that the Slovenian state was interfering in the transfer of Mercator to Fortenova.
The minister, who is on a working visit to Germany, also wrote in the response that he could not comment on the case, as neither the ministry nor him as the minister were acquainted with the agency's acts in individual cases.
"But I believe that the agency, when it comes to the failure to report concentration and the imposed fine, acts in accordance with the adopted rules and legislation," he added.
Počivalšek said that the public part of the agency's decision showed that Agrokor had been called on to report concentration related to the takeover of Costella, but had failed to do so.
Regarding speculations in the public about the state allegedly interfering in the transfer of Mercator from Agrokor to Fortenova, he said that "the rule of law applies in Slovenia, and institutions, including the agency, act independently".
Počivalšek said that the case should not be connected with relations between Slovenia and Croatia. "We are connected with many good joint projects and opportunities we must seize. We need to work on this."
Fortenova said earlier in the day that it plans to protect its assets with all means available, including by informing all embassies of EU countries in Slovenia as well as the US and Russian embassies of the agency's move.
Agrokor took over Costella's parent company three years ago. Since it failed to report market concentration, the watchdog imposed the fine on it three months ago. It now took a step further, seizing 69,57% of Mercator shares, worth EUR 140 million, from Agrokor.
Fortenova meanwhile argues that the decision on the fine is not final because Agrokor has lodged a request for legal protection. However, the agency has not forwarded the request to court, Fortenova says, launching instead the shares seizure procedure.
When the fine was imposed, Agrokor said that Costella was purchased by Agrokor's former owner Ivica Todorović without the knowledge of other executives in the group.
Fortenova finds it problematic that Agrokor's shares were seized based on regulations applying to offences, such as traffic offences, where the perpetrator is caught while committing an offence.
Fortenova claims that the watchdog intentionally abused the law to seize the shares.
Moreover, Fortenova CEO Fabris Peruško held a press conference in Zagreb today, with the Croatian press agency HINA citing him as saying the watchdog's move was designed to hinder transferring Mercator from Agrokor on to Fortenova.
All our stories on Mercator are here
STA, 16 December 2019 - The founding of a new airline in full or partial state ownership after flag carrier Adria Airways went into receivership is not very likely, because this would entail big risks, Prime Minister Marjan Šarec told reporters on Monday.
This was considered one of the ways to keep Ljubljana connected to the world after Adria went into receivership at the end of September.
"There are no major changes, because risks are very high. I think it's not very likely that we get our airline at this point," Šarec told reporters on the sidelines of a parliamentary session.
The prime minister had warned of potential risks such a project would entail on several occasions in the past. At the end of November, he said that a newly founded airline would be destined to operate at a loss.
"All national carriers operate at a loss. When the final figures are released, we'll have to see whether we're ready to go there or not," he said at the time, adding that aviation was quite a risky business.
After Adria entered receivership, the government tasked the bad bank to analyse the possibility of founding a new national carrier.
The bad bank told the STA last week that it had analysed different scenarios, including the setting up of a new carrier. "There are also other possible solutions that would be appropriate for Slovenia," the Bank Assets Management Company (BAMC) said.
BAMC also noted it was regularly reporting on its findings to the relevant ministry.
But both the infrastructure and finance ministries denied for the STA their involvement in any activities related to a potential new airline.
According to unofficial information, Economy Minister Zdravko Počivalšek seems to be more or less the only one supporting the idea.
Some aviation experts say a national carrier would have a hard time competing with strong established airlines flying to Brnik. Adria's flights have been replaced quite well, they say.
Others believe the government should establish a new airline, with a Croatian civil aviation analyst saying this would be in Slovenia's strategic interest.
STA, 16 December 2019 - Just over a year after its launch, the Ljubljana-based European Blockchain Hub, a cooperative designed to act as a platform bringing together blockchain stakeholders, has declared bankruptcy. The District Court of Ljubljana called on creditors to report their claims by 13 March.
Founded in October 2018 with the aim of facilitating the development of blockchain technology and start-ups based on "European values and principles of good corporate governance", the cooperative never really took off.
Its demise mirrors the general fortunes of blockchain itself, a technology that was seen as holding vast potential but became mired in fraud and unfulfilled promises.
This is despite the cooperative having been backed, at least in the initial stages, by 13 supporters, including the Slovenian government, educational and research institutions, and shopping mall operator BTC City.
Director Blaž Golob said the main reason why the cooperative had to enter bankruptcy was because some stakeholders had failed to deliver.
"One of the partners would have had to push ahead, the Tolar HashNET team, but that never happened. BTC was the best partner and invested EUR 50,000 in the project, but it did not want to be the only one," he told the business daily Finance.
Tadej Slapnik, former advisor to the government and long the main proponent of blockchain in government, meanwhile told the paper that stakeholders disagreed with Golob's management and stepped down from positions at the organisations one after another other.
