Business News

Canadian FPS suing Czech Republic for 450 million CZK. Ashok Leyland buys lorry-maker Avia. GDX Automotive plans production transfer to Ostrava. Second largest Czech steel and iron company, Metalimex, changes hands. Skoda will produce more than 20 000 Roomsters in 2006. Sale of Ceska Posta and Letiste Praha could generate 23 billion CZK

Canadian FPS suing Czech Republic for 450 million CZK

Frontier Petroleum Services (FPS), a Canadian company, is suing the Czech Republic for more than 450 million crowns (over $20 million US). The Czech economic weekly Euro magazine reports that the lawsuit has been launched to compensate for an unpaid loan. In 2001, FPS granted a Czech company, Moravan-Aeroplanes a loan of 200 million crowns to buy aircraft-maker LET Kunovice, a bankrupt company. In return, FPS was to receive a 49 percent stake in the revamped company, and the loan was to be paid from subsequent profits. However, the Czech companies concerned went bankrupt by 2004, and so now FPS is seeking compensation directly from the Czech state. Czech Finance Minister Vlastimil Tlusty says that he will deal with the claim directly rather than leaving the matter for international arbitration.

Ashok Leyland buys lorry-maker Avia

Ashok Leyland, an Indian company, is the new 90 percent shareholder of Czech lorry-maker Avia. Thursday's edition of the daily Mlada Fronta Dnes reports that Ashok Leyland paid $35 million US (nearly 800 million Czech crowns) for Avia, a figure cited from the Indian daily The Hindu. The purchase price has, however, not been confirmed by either Ashok Leyland or the Odien Group, Avia's former owner. Ashok Leyland has not yet said whether it will squeeze out the remaining 10 percent minority shareholders in Avia.

GDX Automotive plans production transfer to Ostrava

American car sealings producer GDX Automotive is planning to move its production line from plants in Odry and Pribor in northern Moravia, to Ostrava. Company representatives say that GDX will close the Odry plant, laying-off 20 percent of the more than 600 staff; the remaining employees will commute to the plant at the Ostrava-Hrabova industrial park. The Pribor plant will lose about 300 staff in the restructuring plan. GDX aims to launch production at the Ostrava plant in January 2007. The move is expected to cut production costs and enable a growth in production. GDX Automotive currently employs 1000 people in the Czech Republic, and a total of 7000 people in eight different countries.

Second largest Czech steel and iron company, Metalimex, changes hands

Czech businessman Zdenek Bakala, owner of RPG Industries, has sold Metalimex, one of the largest Czech companies, to entrepreneur Petr Otava. The sale price, as reported in Thursday's edition of the daily Mlada Fronta Dnes, hovered in the 1.5 billion - 2 billion crown range (around $89 million US). Metalimex ranks second on the Czech market in the trade of steel, metals and iron ore, behind Czech giant Moravia Steel. Petr Otava has refused to comment on his purchase of Metalimex, confirming only that he bought 90 percent of the company. Metalimex sales reached 31 billion crowns (over $1.3 billion US) in 2005, just behind the Czech retail chain Makro, and ahead of mobile operator Eurotel (now Telefonica O2).

Skoda will produce more than 20 000 Roomsters in 2006

Czech car-maker Skoda Auto, a member of the Volkswagen group, reports that it will produce more than 20 000 Skoda Roomsters in 2006. The Roomster model went on the market in mid-2006, and Skoda Auto has set future target sales for the Roomster at more than 50 000 units per year. Skoda Auto expects to produce more than half a million cars in 2006, a company record. Sales are expected to total roughly 530 000 cars. Skoda Auto has three plants, its flagship location in the central Bohemian city of Mlada Boleslav, and the company employs over 26 000 people.

Sale of Ceska Posta and Letiste Praha could generate 23 billion CZK

A report prepared by Czech bank Ceska Sporitelna says that the sale of 49 percent of shares in Prague airport operator Letiste Praha, and in postal service provider Ceska Posta, could bring the state more than 23 billion crowns (over $1 billion US) in revenue. The sale of a portion of Letiste Praha could yield as much as 17 billion crowns (over $757 million US) alone. Both Letiste Praha and Ceska Posta are currently state-owned companies, and the report states that these essential service providers are ideal candidates for privatization. In order for the state to be able to sell a portion of the companies, they must first undergo a transformation into joint-stock companies; a process already underway in the case of Letiste Praha. The sale of state assets over capital markets has been commonplace in central Europe, with the privatization of Austrian Post and PKO Bank Polski, and Czech governments have been exploring similar options.