Q:
A:
Zastava survival dependent on debt elimination
Kragujevac,
26 November 2004
Serbian Minister of Economy, and Chairman of the Ministerial Council for Kragujevac factory Zastava Cars, Predrag Bubalo said today that the Serbian government has no concrete offer with follow-up programme for the factory, but only initiatives and proposals of potential buyers.
Bubalo said that Zastava first has to service all its debts so that it can prepare itself for privatisation. The moment the factory becomes debt-free, a buyer can purchase it even if he does not have a programme, Bubalo specified. In any case, the government will insist that the factory keep its main field of activity, that being car production, Bubalo added.
He recalled that the Italian Fiat has written off Zastava's remaining debt, totalling some €30 million, but that that is only a direct debt. However, when guarantees given by banks are included, as well as mortgages and mutual claims, the total debt write-off is €100 million.
The Minister of Economy explained that if Zastava does not pay the remaining 27.5 percent of the debt by end-2005, it will be obliged to pay the debt that has been written off as well.
Bubalo said that at today's ministerial council it was agreed to return internal debts of all Zastava's departments to the banks, totalling several hundreds of millions of euros, and that all Zastava's companies will be relived from responsibility.
According to Bubalo, it is expected that four companies of this former giant will be privatised soon - the Kovacnica forging works, the Alatnica tool factory and the Livnica foundry in Kragujevac, as well as Zastava Elektro from Raca, which attracted the interest of a large number of potential buyers.
Bubalo said that Zastava enjoys great support from the state and added that its companies received 1.8 billion dinars in subsidies until November 22.
He recalled that the Italian Fiat has written off Zastava's remaining debt, totalling some €30 million, but that that is only a direct debt. However, when guarantees given by banks are included, as well as mortgages and mutual claims, the total debt write-off is €100 million.
The Minister of Economy explained that if Zastava does not pay the remaining 27.5 percent of the debt by end-2005, it will be obliged to pay the debt that has been written off as well.
Bubalo said that at today's ministerial council it was agreed to return internal debts of all Zastava's departments to the banks, totalling several hundreds of millions of euros, and that all Zastava's companies will be relived from responsibility.
According to Bubalo, it is expected that four companies of this former giant will be privatised soon - the Kovacnica forging works, the Alatnica tool factory and the Livnica foundry in Kragujevac, as well as Zastava Elektro from Raca, which attracted the interest of a large number of potential buyers.
Bubalo said that Zastava enjoys great support from the state and added that its companies received 1.8 billion dinars in subsidies until November 22.
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