Poland’s PKP Cargo auditing Czech acquisition due to OKD bankruptcy

By bne IntelliNews May 24, 2016

PKP Cargo is carrying out an audit into its acquisition last year of AWT, after one of the Czech rail freight company's main customers, coal miner OKD, filed for bankruptcy, an official from the Polish state-controlled rail cargo carrier said in comments published on May 24. 

The collapsing Czech miner provides 30% of AWT’s freight, PKP Cargo CEO Maciej Libiszewski told Gazeta Prawna. The company hopes the audit will address concerns about AWT’s condition following OKD’s bankruptcy, which has already prompted Poland’s ruling party to suggest the takeover was waste of money. The problems may well threaten PKP Cargo's hopes of bulking up further.

The government has recently launched a bid to probe privatisations carried out under its predecessor for any irregularities. A 67% stake in PKP Cargo, Europe's second-largest rail freight operator, was sold by the state via public offerings in 2013-14, although Warsaw maintains operational control via state rail group PKP.

PKP Cargo acquired AWT for over €100mn a year ago, looking to expand beyond Poland. With plans to cooperate with Croatian company HZ Cargo, the Polish rail freight specialist has said it hopes to offer services along the north-south rail link between the Baltic and the Adriatic seas, a project that has EU backing.

Poland’s ministry of infrastructure has been looking at the takeover of AWT as well. The Infrastructure Minister Andrzej Adamczyk said in the parliament on May 11 that the transaction was a “problem” for PKO Cargo’s stakeholders and would be reviewed. “The money spent on AWT was likely wasted,” Adamczyk said.

PKP Cargo claims, in turn, it is working to disengage AWT from relying on coal transport by making inroads into the automotive market, for example. AWT’s usefulness for PKP Cargo’s expansion plans remains valid, the company also said. However, PKP Cargo’s first quarter results were hit by the acquisition.

 

 

 

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