Franz Kafka, “The Trial”
In the first half of 2007, companies part-owned by Tomislav Đorđević bought around 26.50% of HTP Fontana, Vrnjačka Banja on the Belgrade Stock Exchange from other minority shareholders.
The hotels and catering facilities of Fontana spa resort (7 hotels, restaurants, cafes and other facilities with over 40,000 m2 of office space) required substantial investments after decades of neglect. Through the company Arious Ltd, the largest individual minority shareholder, Tomislav Đorđević offered a loan to the shareholders of Fontana for the necessary reconstruction, refurbishment, and furnishing of the facilities in accordance with the necessary industry standards. The offer was not accepted.
Since June 2007 the Serbian Share Fund, now the Privatisation Agency of Serbia, took over the management of Fontana through temporary custodians of state capital.
Over the past four years (December 2006 – December 2010) hotel Park and several other business premises have been sold off, nearly all real estate has been mortgaged for over RSD 250 million, losses of over RSD 406 million have accrued while Fontana’s obligations increased by over RSD 295 million.
Dozens of lawsuits are being conducted against Fontana. Taxes and contributions for employees have not been paid, other taxes are in arrears. The debt to the municipality alone exceeds RSD 130 million.
At the same time, throughout this period, the Agency (Share Fund) never allowed the shareholders with 26.50% stake to participate in the management of Fontana or to audit its operations, which is why four lawsuits were filed challenging the decisions of General Shareholders’ Meeting of Fontana.
The situation in the Fontana is actually much worse, given that the stated results of four-year management of the company by the Agency (Share Fund) do not include penalty interest, litigation costs and costs of forced execution, which were frozen by the decision of the Serbian government to restructure Fontana in September 2009.
In June 2010, the Ministry of Economy and Regional Development through Mr. Aleksandar Vlahović (Eki Investment Ltd) asked Tomislav Đorđević to make an offer or the sale of the minority stake in Fontana (26.50%). There was no reply to the offer.
On 2 September 2010, after the arrest of Tomislav Đorđević in August, the Government of the Republic of Serbia made a Decision “to find a strategic partner for the development of spa tourism through joint ventures with the Serbian State in a limited liability company”. This Decision stipulates the removal of the largest part of the property of HTP Fontana, including: hotel Zvezda 1 (11,445m2 ), hotel Zvezda 2 (under construction) (11,086m2) and hotel Fontana (9,172m2) (a total of 31,703m2) with equipment and furnishings, as the Serbian State’s stake in the new joint venture. Based on this decision, the Ministry issued a public call for tender for new strategic partners without settling property relations in Fontana.
The rights of minority shareholders were not considered, including the owners of 26.5% of Fontana shares.
The Decision of the Government of Serbia is still in force, the results of the management of Fontana by the Privatisation Agency and Share Fund are known. What about the damage their management has caused the company and its shareholders, and what about the rights of small shareholders in a company which is run by the state?
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