Slovenia tries to stop the Srot

By bne IntelliNews August 8, 2011

Guy Norton in Zagreb -

How the might are fallen. Slowly but surely, the business empires built up by a number of Slovenian entrepreneurs over the course of the past two decades of independence are being dismantled piece by piece. A toxic cocktail of over-ambition and over-leverage, combined with a bitter dash of sharp practice and political shenanigans, mean that a number of wheeler-dealers that were once hailed as heroes in Slovenia are now regarded as zeros.

Chief among them is Bosko Srot, who at one time was lauded as one of Slovenia's most successful citizens with a net worth of over €2bn, but is now generally viewed with contempt and loathing.

A lawyer by training, Srot at one point effectively controlled the country's two biggest brewers, the country's biggest supermarket and three out of the four leading daily newspapers through a labyrinthine legal maze of dummy corporations, friendly companies and share-parking schemes.

But in a classic example of nemesis following hubris, Srot tried unsuccessfully to turn his financial wealth into political influence and raised the ire of the powers that be in the Slovenian capital Ljubljana, who launched an anti-tycoon drive in response.

Having lost the support of politicians in Slovenia, he then lost the support of bankers in the country after they realised - far too late argue many in Slovenia - that the foundations of his business empire were built on the financial equivalent of quicksand. When Srot failed to keep pace on the repayments of the loans he took out to fund his over-weaning ambitions, they seized whole chunks of his empire or made him promise to sell of parts of it to repay them. The net result is that like many one-time Slovenian national champions, the "House of Srot" is now being dismantled brick by brick and sold off to the highest bidder. In many instances, this involves companies being offloaded to foreign buyers - a controversial process in a country of barely 2m people who fear that just 20 years after the country gained independence, it will effectively become a vassal state of global capitalism.

Juicy bits

The latest Srot holding to go under the hammer is juice maker Fructal, which has been auctioned off to Serbia's Nectar in a deal worth the best part of €50m by brewer Pivovarno Lasko, formerly the jewel in Srot's crown that is reported to have debts totalling €400m which it's struggling to repay.

Whereas formerly Slovenian companies were acquirers in Serbia - some 1,400 firms from Slovenia have invested over €1.8bn in the country to date - the financial misfortunes of Srot et al mean that that process is now being reversed, albeit on a much smaller scale. Nectar joins a select band of Serbian firms that have broken into the Slovenian market in recent years. These include technology firm ComTrade, which took over Slovenian software company Hermes SoftLab for around €40m in 2008, and detergent manufacturer Beohemija, which in the same year bought its Slovenian peer Sampionka for €6m.

The next part of the Srot empire to be put on the block is Slovenia's leading daily Delo, for which Pivovarna Lasko is seeking around €45m. Swiss-German publisher Ringier-Axel Springer and Sweden's Bonnier are among the international media groups, which are reported to be interested in acquiring the newspaper. Having previously submitted separate bids the two companies are now acting in unison.

Meanwhile, later this year Pivovarna Lasko and a number of Slovenian and international banks that jointly hold 50.03% in Mercator, Slovenia's leading supermarket are to conduct an international tender for their controlling stake. Earlier this year Pivovarna Lasko had tried to offload its 23.34% share of Mercator to Croatia's Agrokor, but the Slovenian competition watchdog slapped a ban on the disposal because Pivovarna Lasko had not sought its approval.

Agrokor's owner Ivica Todoric, meanwhile, has take advantage of the travails of another financially embattled Slovenian tycoon, Mirko Tus, by buying a chain of supermarkets in Serbia from him for €50m. Tus, like Srot, is now being forced by his creditors to offload assets to repay a reported €450m debt burden. Recent enforced sales by Tus include petrol service station arm, Tus Oil, which was bought by Hungary's Mol for an undisclosed sum in May.

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