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Gorenje to Raise EUR 50M in Fresh Capital

Velenje, 28 May (STA) - Shareholders of household appliance maker Gorenje endorsed on Friday a capital increase of EUR 25m in the first round and another EUR 25m in the second round, planned for this autumn, based on a proposal by the state-owned KAD fund.

Gorenje CEO Franjo Bobinac told the press after the meeting that all shares from the first round would be offered to the International Finance Corporation (IFC), a member of the World Bank Group. The existing shareholders will have no pre-emptive right. The IFC should provide the EUR 25m in a month.

According to Bobinac, the capital increase will help Gorenje implement its strategic plan, invest in development and carry out possible takeovers and restructuring.

As soon as the IFC enters Gorenje's ownership structure, another capital increase will follow in three phases.

In both rounds, the price of newly issued shares will be identical and will amount to EUR 13.32 per share, which is a six-month average of the share's price on the stock market.

In the second round, there will be no limitations to subscription for shares. If any shares remain, they will be offered to third parties.

The shareholders also appointed new supervisory board to represent their interests, featuring Peter Kraljic, Maja Makovec Brencic, Keith Miles, Uros Slavinec and Marcel van Assen. Their four-year term will start on 19 June.

Bobinac quoted data for the operating results for the first quarter of 2010. The group generated almost EUR 291m in sales revenues, which is 1.5% more than in the same period last year.

Operating profit stood at EUR 7.8m, while in the same period last year the group posted a loss of EUR 7m. Profit before income tax, depreciation and amortisation trebled year-on-year to EUR 21.1m.

Bobinac said that the sales in western Europe were increasing, while they dropped by 12% in eastern markets such as Russia, Ukraine and Poland. In Slovenia, sales dropped by 7%.

In 2010, Gorenje increased its market share on most of the markets, while the number of employees was reduced by 4.2% in the first quarter. By the end of the year the company is to cut its headcount by 300.

Asked which company Gorenje was planning to acquire this year, Bobinac refused to specify. He confirmed however that Gorenje submitted a binding bid on Thursday and that the deal should be closed by the end of June. According to unofficial sources the company in question is Gorenje's Swedish rival Asko.

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