Jay, you who is from the trade: does this qualifies as looting?
Nomura can settle deal with worthless shares
By Robert Anderson in Prague
Financial Times; Nov 12, 2003
A London-based arbitration tribunal yesterday cleared the way for Nomura Securities, the Japanese investment bank, to use worthless shares to pay for the brewer of Pilsner Urquell lager, which it subsequently sold on for $629m in 1999.
The decision, which is final, will allow Nomura to settle the transaction with its former Czech affiliate Investicni a Postovni Banka (IPB), now owned by Ceskoslovenska Obchodni Banka (CSOB), a subsidiary of KBC of Belgium.
However, the judgment will not end the controversy: both CSOB, the biggest Czech bank, and the Czech government have launched claims against Nomura for allegedly asset stripping IPB, accusations Nomura denies.
Nomura bought Plzensky Prazdroj and Radegast, the Czech Republic's two largest breweries, from IPB a few days before taking a 46 per cent portfolio stake in the bank in 1998. It then sold the breweries to South African Breweries for $629m the following year.
Nomura put together a complicated transaction with IPB in which, via offshore special vehicles, it deferred the Kc7bn - $220m at the time - payment for the breweries, with the option of using its own shareholding in the bank, a stake that at the time was assigned a notional value of $179m.
IPB collapsed in 2000 after a liquidity crisis and its assets were taken over by CSOB. After an audit, the bank was found to be insolvent and therefore CSOB paid nothing to Nomura and other shareholders for their shares.
Nomura immediately sought to exercise its put option, which would allow it to settle the breweries deal in the now worthless shares.
CSOB contested the enforceability of the put option, but the tribunal yesterday finally allowed the transfer of IPB shares to go ahead, once Czech police unfreeze them.
CSOB said the judgment would improve its chances at the Prague Commercial Court in its claim for Kc24bn ($860m) in damages arising from the breweries deal.
CSOB's attempt to hear the case in London failed last year and the Prague court has yet to begin formal hearings. |
