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Ex Primorje Managers in Attempt to Prevent Disowning

Ajdovščina, 22 March (STA) - Former managers of Primorje, the troubled Ajdovščina-based construction company, announced on Thursday that they would challenge the validity of the planned auction of nearly 20% in the company and launch legal action against the management of Primorje and its owner, Primorje Holding.

A group of shareholders with over 50% interest in Primorje Holding issued a press release in which they argue that the managements' activities are "detrimental" to the companies and that "the management in neither company is acting for the benefit of the company, its employees and shareholders".

Meanwhile, the management of Primorje announced a new attempt at persuading the ministries of finance and economy to secure EUR 20m so the company could reach a settlement with banks to survive.

The shareholders of the company which served as a vehicle for the management buyout of Primorje also announced that they would challenge the validity of the auction called for 2 April by the creditor bank Factor banka on the grounds that the planned proceeds do not correspond to the value of the company and the debt secured with the shares.

The shareholders also complain of "unreasonable haste" considering a capital injection into Primorje Holding will be on the agenda of the shareholders's meeting on 12 April, which they say could mean that Factor banka will get its dues paid back in full.

Factor banka announced an auction of 154,660 of Primorje shares that Primorje Holding placed as collateral for a loan used for the management buyout on Wednesday. The asking price is EUR 1.3m, a fifth of the share capital of Primorje at EUR 6.5m.

According to Dnevnik, Factor banka is the first of two creditors of Primorje Holding to decide for disowning mostly former managers of Primorje, including the former chairman Dušan Črnigoj.

Slovenia's biggest bank, NLB, which also supplied loans for the management buyout at Primorje, confirmed for Dnevnik it was preparing to sell its stake in Primorje holding.

The daily speculates that the banks may buy the stakes they are selling themselves considering that the plan for the financial restructuring of Primorje envisages that banks enter the builder's ownership.

According to Dnevnik, the former managers stopped paying back loans last year with EUR 6m still due out of the total of EUR 18m.

Presenting the situation at the company to the press today, Primorje chairman Marjana Novak said that she had negotiated EUR 9m worth of conversion or write-off on claims by banks and other creditors.

But since the creditor banks set double that figure as the condition for their cooperation in the restructuring of the company, Novak said the state should help.

The company, the last of the large construction companies in Slovenia still standing, has time until the end of the month to reach an agreement with the banks or else it could become insolvent.

Revenues in January and February amounted to around EUR 14m, most of which went to pay off subcontractors.

According to Novak, Primorje has currently EUR 135m worth of contracts, EUR 110m of which is for work to be done this year. Three-quarters of the contracts are for jobs abroad.

"We could compete for contracts worth between 600 and 650 million euros abroad this year alone, while deals worth 700 million euros are expected to be available in Slovenia in the future," Novak said as she cited reasons why the state should help the builder.

She said a strategic partner was an option, but only once the situation with the banks is settled. She added that three or four prospective partners had called on the company and were given access to certain data.

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