In Business News this week: Orco fails to convince creditors; a sigh of relief for tax dodgers; Hyundai officially opens its Czech plant amid more closure news from other foreign owners; and farmers resort to direct sales to beat the supermarkets.
Developer on the rocks after rejection of debt restructuring deal
The future of one of the biggest development firms in the Czech Republic, Orco, looked increasingly shaky at the end of this week. Creditors in the debt-burdened company rejected a restructuring programme after a marathon 11-hour meeting. The programme called on them to accept a new for old bond swap which would have left them out of pocket. Orco will now seek a prolongation of its protection against creditors which it can no longer pay. The developer expanded fast in Central Europe during the boom years but has been hard hit by the economic crisis. Its overall debts are estimated at around 1.6 billion euros.
Disappointment over tax haven data
Czech moves to close in on tax dodgers using foreign havens have run into problems. Tax inspectors had been expecting that data obtained by the German secret services would give them leads on an estimated 4,500 accounts opened in the principality of Lichtenstein by Czech companies and individuals. Most of the accounts are believed to be used for tax evasion. However, it now appears that dodgers can breathe more easily. All the Germans have reportedly provided is a few pages of printed notes containing nothing new.
Hyundai officially opens Nošovice plant
South Korean car maker Hyundai officially opened its plant at Nošovice, in the east of the country this week. Although the plant has been producing since November last year, company bosses postponed the official ceremony because of the economic crisis. That meant the new plant was at one time working only four days a week. They now judged the timing to be right and have said that in spite of the crisis they are sticking to plans to eventually produce 300,000 cars a year at the plant. The target this year is to manufacture 160,000 cars with a third new model coming off the production lines in November.
Foreign drug, finance groups add to spate of shutdowns
But there has been more gloomy news from other foreign investors in the country. The world’s biggest maker of generic drugs — Israeli-based Teva Pharmaceuticals — has said it will close its Brno plant with the loss of 400 jobs. It will move production to Hungary and the Netherlands. Dutch financial giant ING is also restructuring its Central European activities and moving most of its regional information technology and administration to Romania. Czech media reports say up to 40 percent of ING’s 750 Czech-based staff will be laid off. Foreign-owned firms have announced a spate of plant closures in recent weeks.
Dairy farmers opt for automats to fight supermarkets
Czech media have reported that automatic milk-selling machines, which look and function like normal coin operated drinks dispensers, are sweeping the Czech countryside. They highlight a series of farmers who have installed machines to sell milk direct to the public at cheaper prices than the supermarkets, in order to break their stranglehold on the market. And they say many others are thinking about making the switch. The main reason is that farmers currently receive only around a third of the retail price of milk on the supermarket shelves. With the automat sales they can double their money.