YBM UNVEILS HUNGARIAN EXPANSION
Karen Howlett
Paul Waldie
THE GLOBE AND MAIL
September 18 1998
YBM Magnex International Inc. has quietly unveiled plans for a $23-million (U.S.) expansion of its Hungarian operations, despite calls from institutional shareholders to stop all major projects.
Last month, Jacob Bogatin, YBM's chairman and chief executive officer, launched the project at a ground-breaking ceremony in Budapest. The expansion will double the size of the company's Budapest magnet plant and employ 300, YBM told local reporters. The company plans to finance the project with the proceeds of a $34-million equity financing done last November.
The launch was not announced in North America and many YBM shareholders had no idea the project was underway.
YBM spokesman Guy Scala confirmed yesterday that the launch took place, but said the plant expansion has since been put on hold.
However, Gabor Varga, president of YBM subsidiary Magnex RT, told Hungarian reporter Georgi Kocsis this week that construction is proceeding, Ms. Kocsis told The Globe and Mail yesterday.
Mr. Varga also confirmed in the interview that YBM recently bought a dormant magnet plant in Russia. Controversy surrounding that acquisition divided YBM's board and played a role in the resignations of lawyers from three Toronto firms that represented the company, sources close to the situation said.
YBM's plans for the Hungarian plant infuriated Paul Yetter, a Houston lawyer representing several YBM investors.
"For the company to be taking significant corporate steps to expand or acquire other companies without keeping shareholders informed along the way is indefensible," Mr. Yetter said yesterday. "Shareholders not only deserve to know what's going on, they are legally entitled to know what is going on."
YBM is based in Pennsylvania and its shares are listed on the Toronto Stock Exchange. The shares have been suspended since May 13, when the FBI raided the company's headquarters in connection with a criminal investigation. YBM's auditors Deloitte & Touche resigned in June, amid questions about YBM's financial affairs and alleged links to Russian mob figures. |
