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Praga Hostivař not for sale

Auto-parts maker rejects bid from truck producer Tatra

August 8th, 2007 issue

By Viktor Velek

Staff Writer

The auto-parts manufacturer Praga Hostivař is not for sale — at least as long as it’s Tatra, the Czech truck producer currently locked in a legal war with Praga over a military contract, attempting the purchase.
Praga declined to sell its shares to Tatra late last month, when representatives of the disputing companies met in Prague.
“We immediately rejected the offer. It is a closed matter and no other negotiations are being held,” said David Brázda, chairman of Praga’s board of directors, of Tatra’s offer, made July 30.
Tatra’s attempt to buy Praga was motivated by internal strategies, said Tatra spokesman Dušan Benža. The offer was not disclosed.
Apart from showing an interest in buying Praga, Tatra’s CEO, Ronald Adams, offered the firm a contract for axle supplies. The offer is unrelated to the controversial military contract.
Praga is currently suing Tatra over a canceled 438 million Kč ($21.4 million) subcontract the company received from the Czech military. The next hearing of the arbitration dispute is scheduled for Sept. 19, with a verdict expected by the end of that month, Brázda said.
Relations between the firms have been frozen since the beginning of the year, when Tatra canceled a deal with Praga that would have seen the company provide gearboxes and axles for the Czech Army’s new trucks.
The U.S.-owned and Czech-based Tatra is supplying the military with 556 off-road trucks. The company secured the contract, worth 2.6 billion Kč, without a tender as an incentive to domestic industry. If possible, the trucks must be constructed from Czech-made parts, according to the contract’s commission.
Praga Hostivař was one of five subcontractors named in the contract with secured supply shares. Tatra later removed Praga from the list, with the approval of the Defense Ministry.
“Praga had supplied several axles, but we weren’t satisfied with their quality,” Adams told the Czech News Agency.
Praga rejects this complaint, saying Tatra was uncooperative at the time of developing the axle. Brázda speculates Tatra may have canceled its contract to pave the way for a takeover of Praga.
“After the offer made last week, I suspect that by terminating the contract, Tatra wanted to drop Praga’s value,” he said. “Then they could buy it later for cheaper.”
The dispute has attracted some attention from politicians. Jan Vidím of the Civic Democrats, head of the Chamber of Deputies’ defense committee, has called on the Defense Ministry to cancel the contract with Tatra. He says the company has diminished the role of Czech companies in the contract.
Nevertheless, components supplied by Czech firms will still account for nearly 80 percent of all parts, the company says.
Viktor Velek can be reached at vvelek@praguepost.com


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