The biggest national betting and lottery firm and paymaster for Czech sport, Sazka, is fighting for its survival. On Monday, one of Sazka’s creditors filed for insolvency proceedings against the firm, claiming the betting giant is no longer able to pay its debts. Sazka’s management fiercely repudiates the demand but the firm is looking hard to steer its own way out of trouble.
In April 2004, Sazka Arena, a new, state of the art venue in the capital was inaugurated with a lavish show, attended by scores of VIP guests including President Václav Klaus. But the ceremony was marked by controversy when Sazka’s boss Aleš Hušák refused to invite the then Prime Minister Vladimír Špidla in retaliation at the government’s refusal to provide state guarantees to pay for the new venue. That forced Sazka to borrow some eight billion crowns, a move that six years later has brought the company to the verge of collapse.
On Monday, one of Sazka’s creditors, entrepreneur Radovan Vítek, filed for insolvency proceedings against the company at a Prague court. By the end of last year, Sazka’a debts reached some ten billion crowns. In December, Sazka announced it would be unable to pay part of the debt due in January. Standard and Poor’s then lowered the company’s rating to D, meaning default risk.
Sazka history harks back to 1956 as a betting firm whose proceeds would fund the country’s sports associations. Sazka’s mission changed little in the early 1990s when it was transformed into a joint-stock company. But under pugnacious manager Aleš Hušák, a former collaborator with the communist secret police, payments of debts for the arena began to eat up Sazka’s contributions to Czech sports. If the firm folds, sporting associations will likely end up empty handed. But that is no concern for Radovan Vítek, who has taken the lead in the battle for the betting giant. He described his mission as follows:
“My job has nothing to do with financing sports. I’m a creditor of the company, and I’d like to get my claims paid. But if this group of dilettantes keeps managing Sazka, it will go under sooner or later.
“I would suggest the firm lowers its capital stock, removes its current shareholders who caused this to happen, and emits new shares of ten billion crowns which is roughly what Sazka owes. Its creditors will then become its shareholders, but that will be the end of the sports associations. Sazka will no longer be theirs.”
Sazka maintains the firm is not threatened by a default on its debt and that it will be able to cope with the situation itself. The court will take several weeks to decide whether it will send the firm into bankruptcy. While Aleš Hušák is confident the court will eventually turn down Radovan Vítek’s proposal. Sazka’s attorney Jaromír Císař offers his own take on Mr Vítek’s move.
“Mr Vítek submitted the proposal for insolvency proceedings for one reason alone: to take advantage of the panic situation which he expects once the proposal is filed. He believes claims against Sazka will lose value and he will be able to buy them and in the end control the company.”
Sazka is taking its own course of action. The firm is considering several offers to sell the O2 Arena and would also like to reach a new deal with major bondholders. Czech Radio reported on Wednesday that a meeting behind closed doors was taking place between Sazka’s management and Česká Spořitelna, Fortis, Citibank, Unicredit and J&T Bank which could secure another loan for the troubled betting firm. Several other investors, including the financial shark Penta and Sazka’s direct competitor, Synot, are also interested in getting stakes in Sazka in one way or another. Meanwhile, the Czech Sports Association is standing by the company’s management, betting on a brighter future.
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