Attempt to privatise Serbia’s Galenika falls through

Attempt to privatise Serbia’s Galenika falls through
By bne IntelliNews February 9, 2017

Negotiations on a strategic partnership between Serbian state-owned pharmaceuticals company Galenika and a Russian-UK consortium have fallen through, the ministry of economy announced on February 8. The partnership with Russia’s LLC NPA Petrovax Pharm and the UK’s Frontier Pharma Limited would have included the sale of a 25% stake in Galenika. 

The deal collapsed since the bidder failed to take any steps towards the resolution of Galenika’s debts to commercial banks, according to the ministry. It is not known how much Galenika owes to commercial banks, but local media speculate that the amount is between €70mn and €150mn. The sale of the 25% stake was expected to help manage this issue.

The ministry said on February 8 that in parallel with the negotiations with the consortium, along with Galenika’s management it was looking at possibilities for debt restructuring, in case the strategic partnership collapsed.

“In that regard, the government has adopted the conclusion which recommends that state creditors do not request a block on the company’s accounts, launch procedures to collect receivables or withdraw collateral that are due for payment by Galenika and its subsidiaries, until final agreement with commercial creditors is reached, but no later than March 31, 2017,” the ministry’s statement reads.

The ministry added that Galenika is currently operating stably and does not have problems servicing its current liabilities.

“The ministry of economy will take all measures to come up with a new model of privatisation for this company as soon as possible,” the ministry said.

The economy ministry initially launched the tender for a strategic partnership which included the acquisition of a 25% stake in Galenika in April 2016, setting the starting price at just €7mn. In September, the ministry announced that the consortium of NPA Petrovax Pharm and Frontier Pharma Limited was was the only bidder to meet conditions for a strategic partnership with Galenika even though India’s Cadilapharm and Brazil’s EMS S.A. also made bids. According to the ministry’s September statement, the consortium offered €7mn for the 25% stake and proposed to keep on a minimum of 700 workers.

Galenika once had a market share of 60% in the former Yugoslavian markets of 24mn people. Nowadays, it controls only around 10% of the Serbian market of 7.1mn people. It employs 1,400 people.

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