The Prague Post
http://www.aaaradiotaxi.cz/index.php?xSET=lang&xLANG=2
December 1st, 2008
Endowment Fund     Business Listings ONLINE      Reservations      Classifieds    Subscriptions
Prague accommodation

Home » Archives » Business

Setuza attempts to reinvent itself

Hopes to gain public opinion as 'trustworthy, stable company'

By Markéta Hulpachová
Staff Writer, The Prague Post
July 4th, 2007 issue

COURTESY PHOTO
Production is picking up at Setuza, where the company hopes new ownership will save its reputation.
Setuza, a key Czech producer of biofuels, food and drugs, is rising from the ashes.
After years of drowning in debt and struggling with an image marred by questionable leadership, the manufacturer signed an agreement June 1 to pay back its 4.4 billion Kč ($206 million) debt to the state. It also has also severed ties with its former general manager, the notorious entrepreneur Tomáš Pitr. Pitr is currently appealing a court decision of two years ago convicting him of tax fraud.
“Reaching an agreement with the state, implementing new managerial directives and standardizing relations with our business partners should give Setuza back the label of a trustworthy, stable company,” Martin Procházka said, who replaced František Janů as Setuza’s new general manager July 2. Procházka is simultaneously the general manager of Setuza’s sister corporation, the chemical company Spolchemie, which is owned by glue and adhesives manufacturer Via Chem.
The June 1 agreement stymied an execution order previously issued to Setuza by national courts. After averting the execution by paying off a part of Setuza’s debt, a new priority for the company’s management is financial stabilization. In 2005, Setuza reported losses of 84.7 million Kč. The company has an annual revenue of approximately 7.2 billion Kč. “We want to be in positive numbers next year,” Procházka said. “I am convinced Setuza has the potential to reach profits in the hundreds of millions.”
To increase profits, Setuza plans to consolidate and reorient its production focus. The company, which is based in the north Bohemian regional capital of Ústí nad Labem, recently sold off its biodiesel plant in Mydlovary, south Bohemia, and moved the operation to its newly built facilities in Ústí nad Labem.
To diversify its production, Procházka wants to curb further investments into biodiesel production and steer Setuza’s focus toward consumer products.
“Concentrating solely on biodiesel is too risky because of the field’s overt dependency on government support,” Procházka said. “We want to double our production of washing detergents, continue making toothpastes and increase our cooking oil sales, both domestically and abroad.”
A company with a vital role in Setuza’s revitalization is PPF Investments (PPFI), a separate holding of the PPF Financial group, which is co-owned by Petr Kellner, the country’s wealthiest man and Forbes magazine’s 224th richest person. On May 3, the Anti-Monopoly Office (ÚOHS) approved PPFI’s purchase of part of Campaspol Holding, which owns Setuza through its majority shareholder, the consumer oil company Czech Oil.
PPFI’s investment in Setuza is the company’s first purchase on the Central European biofuels market. In September, a new Czech law will mandate that all diesel fuel contains at least 2 percent biofuel. The law is in accordance with a European Union directive to lower carbon dioxide emissions. According to Procházka, PPFI’s investment into Setuza is a strategic move.
“Partnership with PPFI ensures Setuza’s financial stability,” he said. “Its stronghold on Central and East European markets may prove beneficial to our export plans.”
The company’s involvement with Setuza dates to January 2006, when it offered to pay the government 570 million Kč for a 4.4 billion Kč claim that Setuza owed to the Agriculture Ministry–controlled Support and Guarantee Farming and Forestry Fund (PGRLF). The deal was never completed.
Instead, the PGRLF issued a public tender for the claim in May 2006. This time, PPFI offered PGRLF 815 million Kč, making it the tender’s highest bidder, but the tender was canceled due to government concern over an ongoing legal battle that called into question the validity of Setuza’s debt to PGRLF. Four months later, Pitr and his cohorts sold Setuza to M.L. Moran, a management and financing firm that acquired Setuza by purchasing a 90 percent stake in Czech Oil.
In December 2006, the government suggested an execution order for Setuza’s property. Czech courts approved the order in January 2007. Meanwhile, M.L. Moran sold Czech Oil to Campasol, thus transferring control of Setuza to Via Chem, Campaspol’s parent company. Four months later, the ÚOHS approved PPFI’s buy into Campaspol, which is now co-owned by Via Chem, PPFI and German biodiesel producer Campa Biodiesel.
In early June, Setuza’s current owners guaranteed the company’s debt to PGRLF by paying the Agriculture Ministry 1.1 billion Kč for the claim and an additional 100 million Kč as insurance that Setuza’s debt will not be subject to additional fees.
“All financial obligations of the agreement will be paid out simultaneously,” Agriculture Ministry spokeswoman Táňa Králová announced June 1. “The contract is further guaranteed by an agreement that gives PGRLF buyers’ rights to a minimum 38 percent share in the company.”
Setuza fell into debt under the leadership of Pitr, who was the company’s chairman of the board until Setuza’s September 2006 sale to M.L. Moran. In 2005, Czech courts sentenced Pitr to eight and a half years in prison for committing three separate acts of tax fraud in 1994. By requesting value-added tax returns from the financial bureau through fraudulent invoices, Pitr and his cohorts stole more than 23.5 million Kč from the state.
The courts ordered Pitr to serve five years of the sentence May 25, after a drawn-out series of legal battles. Last month, the state issued an international warrant for Pitr’s arrest.
Pitr also is under investigation for the murder of his former business partner František Mrázek, who was gunned down in January 2006.
With its new ownership, Setuza hopes to move away from the cloud hanging over its prior owner.
However, “we’re not under the illusion that our reputation will be redeemed from one day to the next,” Procházka said.

Markéta Hulpachová can be reached at mhulpachova@praguepost.com


Other articles in Business (4/07/2007):

Browse the Current Issue

If you enjoyed this article, why don't you subscribe to the print version!
We accept secure online transactions provided by PayPal and Moneybookers

Be the first to add a comment!


Full Name: *
City: *
E-mail: **
This comment can be published in the print version of The Prague Post
Enter the text on the right:
 visual captcha
Comment: *
* Required field. In order to be approved for display, comments must have a first and last name and a city.
** E-mails are required and will only be used for internal purposes.

Most visited in Business Listings

Hotel booking
The Prague Post Online contains a selection of articles that have been printed in
The Prague Post, a weekly newspaper published in the Czech Republic.
To subscribe to the print paper, click here.
Unauthorized reproduction is strictly prohibited.