The government is disagreeing over whether the Federal Industry-Holding Stock Corporation (ÖIAG) should get involved in the handling of a major bankruptcy to save jobs.
Social Democratic (SPÖ) General Secretary Günther Kräuter suggested yesterday (Sun) ÖIAG should be used as an “active industrial-political instrument” after it became clear on Friday that plans to carry out an organised insolvency of struggling A-Tec Industries AG (A-Tec) failed. The Social Democrat said the holding should be turned into a “dynamic and flexible model which considers participation scenarios.”
ÖIAG currently manages the Republic of Austria’s participations in oil and gas company OMV AG, postal services provider Post AG and mobile communications company Telekom Austria (TA). It is headed by Markus Beyrer. The coalition’s different approaches to the role and importance of ÖIAG became more evident than ever before when Beyrer took over from Peter Michaelis in February. The SPÖ attacked Michaelis for his particular interest in privatising companies owned by the state – and for his annual income of more than 700,000 Euros.
Referring to various corruption scandals ex-TA bosses are entangled in, Kräuter claimed yesterday ÖIAG had failed as a body with not much more than a supervisory function. Kräuter’s party criticised the holding for allegedly having paid inappropriately high salaries to its chiefs before. Beyrer allegedly earns less than half the amount Michaelis had received per year.
The SPÖ also said ÖIAG should undergo an extensive restructuring process or be dissolved. The Social Democrats criticised it for the small number of firms it was cooperating with to manage the state’s participation. The People’s Party (ÖVP) opposed its government partner’s proposals, saying that ÖIAG’s importance should increase. The unheard call of dissolving ÖIAG is one of the many broken promises to voters made by SPÖ Chancellor Werner Faymann, his critics have pointed out.
ÖVP General Secretary Hannes Rauch hit back at Kräuter on the same day. Rauch said ÖIAG “must not become a bankruptcy holding.” The ÖVP official described such a move as a “setback into former times.” Rauch claimed such a remodelling would cost billions and would not guarantee facilities on Austrian soil and positions either.
Kräuter argued ÖIAG could be used trying to keep A-Tec’s industrial know how in the country. The once powerful firm, which achieved a turnover of three billion Euros before opening insolvency procedures in October 2010, is about to get sold to foreign investors. A deadline to transfer 210 million Euros to an escrow deposit ran out on Friday. The expert received only 30 million Euros from firms interested in snatching A-Tec, according to reports.
A-Tec bosses recently agreed with Contor Industries Gmbh (Contor) about a takeover. Contor said it had several international enterprises on board to invest in A-Tec. Especially firms based in Asia were part of the agreement – which burst when A-Tec CEO Mirko Kovats abstained from asking shareholders to give the go-ahead to the deal at a meeting last week. The under-fire businessman claimed bosses of a company intending to spend money on an A-Tec subsidiary had a change of mind due to Penta’s threats. The Czech-Slovakian company warned it would take A-Tec and Contor to court, pointing out that Contor was established only after businesses interested in acquiring A-Tec had to make their offers.
Kovats angered Penta managers already months ago by claiming that founders of the company used to be members of the Soviet Union’s national security agency, the KGB. The entrepreneur announced he decided to opt for Contor instead of Penta since Penta bosses failed to reveal where their assets originated from. The envisaged deal between A-Tec and Contor had been under scrutiny ever since it was made public that Contor was founded by Thomas Schätti, a former business partner of Kovats.
Kovats holds around 66 per cent of shares in A-Tec. The company – which was taken off the Vienna Stock Exchange (WBAG) this morning – had around 12,000 employees two years ago. It engages in the production of tools, establishment of industrial facilities and various other business sectors. Die Presse newspaper reported on Saturday A-Tec’s supervisory board now wanted Kovats to hand over his shares.
Kovats explained some weeks ago he intended to withdraw from daily business at A-Tec as soon as a sale was agreed upon. The firm’s supervisory committee reportedly tries to do what it can to get as much money for A-Tec’s various affiliates from firms interested in investing after the expired deadline. However, dailies are also speculating that the supervisory board may also brace for legal action by shareholders due to its alleged negligence towards Kovats and his disputed decisions.
Wilhelm Rasinger of Austrian investors’ protection group IVA, who had harshly criticised Kovats before, claimed yesterday the company’s supervisory panel should have been more careful. The IVA official – who criticised A-Tec’s various “unnecessary” investments such as the purchase of three planes – pointed out that Kovats had been involved in more than 30 bankruptcies in the past 20 years. Rasinger added trustee Matthias Schmidt should resign. He claimed Schmidt did not work professionally and added that he lacked the needed distance to Kovats. Schmidt labelled the criticism of Rasinger as “baseless”. He said Rasinger was “not aware of the facts.”
Asked to estimate the overall damage the demise of A-Tec would mean, Rasinger mentioned 500 million Euros. He warned stakeholders that it was highly unlikely for them to get any money in the procedure. Referring to the plan to sell A-Tec’s subsidiary firms, he stressed that the economic environment was not improving. Reports have it that Penta and a Chinese company were still interested in taking over enterprises linked to A-Tec now that takeover prices are likely to shrink dramatically. Rasinger told the Kurier newspaper today Kovats should never have been allowed to handle the insolvency proceedings himself. “This was a mistake (…) I warned about,” he said.
Die Presse wrote in a commentary on Saturday that the decline of A-Tec was “no one’s fault but Kovats’.” The newspaper claimed the businessman had all positive and negative characteristics of an entrepreneur: willingness to take risks, courage and creativeness but also recklessness, arrogance and (undue) hardship. It added that Kovats treated those interested in investing and rescuing his company “like supplicants”. The daily concluded: “Never trust a gambler – even if he poses as a company boss.”
Kovats has been praised for getting ailing companies back on track after acquiring them. His critics emphasised that he sacked many employees in all of his successful attempts to restore a firm’s finances. Rasinger said yesterday: “It is more than annoying that someone like Kovats can leave a trail of blood in Austria despite many warnings.”
Kovats has often been described as a “self-styled turbo capitalist”. He claimed in his book “Die Sowjets hatten recht” (The Soviets were right) – which was released a few weeks before A-Tec had to declare insolvency – that “The Republic of Austria would clearly be a bankruptcy were it a company.”