Velenje/Ljubljana, 15 November (STA) - Home appliance group Gorenje admitted on Monday that its EUR 25m capital raising plan will likely fail due to a lack of interest, which it blamed on a lack of liquidity on Slovenia's equity market.
The Velenje-based group has seen little interest in three rounds of capital raising started in September. According to reports, it had sold EUR 4.8m worth of shares through two rounds, which is well short of the 70% cap for the capital raising effort to be deemed successful.
The company turned to Mexican group Mabe in the third round, which was open to non-owners, but business daily Finance said that Mabe changed its mind at the last minute, thereby dooming the capital injection.
In a statement issued on Monday, Gorenje said that investors have been reserved to the capital injection due to the lack of liquidity on the Slovenian equity market.
But despite not deciding to take part in the capital injection, Mabe is still a potential partner or even investor in Gorenje, Finance added quoting well-placed sources.
This was confirmed by Gorenje, which said that Mabe was a potential partner with which the group could achieve synergies, which was why talks were still examining ways of securing growth for both companies.
Meanwhile, Gorenje rejected a last-minute offer from Philip Sluiter, the Dutch businessman who sold kitchen appliance maker ATAG to Gorenje in 2008 and holds nearly 7% of the group.
Sluiter, who Finance says does not support the current management, is reported to have offered to buy all of the EUR 20m in shares under the condition that company undertakes restructuring.
As part of this, Sluiter called for a business strategy to be crafted with the help of a renowned consultancy firm and hinted at changes in management.
In response, Gorenje said that Sluiter had passed the opportunity to buy the shares in the first two rounds which were open only to existing shareholders.
"The offer of Home Products Europe (the company owned by Sluiter) is not in line with the valid prospectus...which is why Gorenje cannot provide an invitation for participation," the group said.
The three rounds of capital raising were launched in September, three months after the International Finance Corporation carried out a EUR 25m capital injection to Gorenje. Together with the IFT injection, Gorenje wanted to raise EUR 50m.
The capital raising had been approved by shareholders in May as part of the management's strategy to speed up implementation of its strategic goals which envisage the company raising its revenues to EUR 1.5bn by 2014.
The biggest shareholder in Gorenje is the state-owned Pension Fund Management (KAD) with 22.2%. IFC holds 11.8%, while Ingor, a company associating Gorenje executives, owns 5%.
Gorenje added in its statement that the failed capital injection should not affect business in the coming two years.
However, Finance writes that Gorenje will speed up its sale of non-core investments, including energy holdings (Gorenje owns half of Istrabenz-Gorenje, which in turn holds a stake in power company GEN-I) as a result.