The audit firm "Hlb Mont Audit" has been chosen as a consultant that will participate in the process of merging the Railway Transport (ŽPCG) and the Maintenance of Railway Rolling Stock.
Her offer was chosen as the most favorable in the tender that ŽPCG announced at the beginning of June. The purchase value was 15.000 euros without VAT, while the contract was concluded for 8.489 euros.
ŽPCG "Vijesta" did not directly answer the question of when the consultant should complete this work and when it is realistic to complete the merger process.
"Given that the new executive director has recently taken office, in cooperation with the Board of Directors and the relevant Ministry, all aspects of this process will be thoroughly reviewed, including further activities and time frames. More detailed information about this process will be available after the completion of the mentioned steps, about which the public will be informed", said the ŽPCG.
Dragana Lukšić was appointed as the new director of ŽPCG on October 17.
The tender documentation states that the maximum deadline for the completion of the work is six months from the date of signing the contract, and that this work includes the procedure of merger by merger and legal advice during the implementation of this procedure in accordance with the provisions of the Companies Act. This entails drafting the necessary documentation including, but not limited to, the Merger Agreement, and obtaining all relevant approvals from regulatory authorities and implementing activities aimed at successfully completing the merger in accordance with Article 242 of the Companies Act.
The Faculty of Economics in Podgorica conducted a study on the justification of the merger of OŽVS with ŽPCG, which showed that the merger would be justified if it was accompanied by rationalization, a reduction in the number of employees and the total cost of wages.
The study analyzed two possible merger scenarios, the first of which would include the rationalization of costs and the reduction of the number of employees, and the second of the merger without rationalization and with the existing number of employees. The analysis showed that the second scenario would not have positive effects, which is why the team of authors from the Faculty of Economics proposes a merger with rationalization.
In the Study, it was stated that the merger is necessary because otherwise OŽVS will end up in bankruptcy at this rate, and this would further threaten the development of railway traffic. In the total operating costs of the company, 80 percent are the costs for salaries, and as stated, this is one of the causes of the unprofitability of the company.
OŽVS generates income based on train maintenance services provided by ŽPCG and another state-owned company for freight rail transport, Montekargo.
In order for the merger to be implemented, such a decision must be made by the shareholders' meetings of both companies with a two-thirds majority.
In May, the government bought the shares of minority shareholders of two companies on the Montenegro Stock Exchange for almost EUR 1,4 million.
A single Ministry of Transport and Maritime Affairs headed by a minister Filip Radulović announced in the spring that no employee of OŽVS will lose their job due to the merger.
The restructuring procedure through mergers of joint stock companies such as OŽVS and ŽPCG, in accordance with the Law on Business Companies, is a complicated and long process.
The basic condition is that "the restructuring of a joint-stock company can only be carried out if the assets of the company are greater than its liabilities".
Once this is established, then valuations of the company's assets and determination of the value of their shares are made, so that the shareholders of the merging company (in this case OŽVS) will receive shares in the new ŽPCG.
In the study itself, the auditor's report states that the status of the OŽVS property in Podgorica, Bar and Nikšić, whose estimated value in the balance sheets is 11,4 million euros, is disputed. As they stated, in the cadastres, that land is registered with the ŽPCG (there was no change in registration after the division) or the state.
In addition to this property, the depot in Podgorica, which was given to ŽPCG by OŽVS in 2013, is also disputed. After handing over this depot, without compensation, OŽVS had a drop in income of about 20 percent.
According to the balance sheet after nine months of last year, OŽVS had a basic capital estimated at 21 million euros, however, as it has an undistributed loss of eight million euros, the company's capital amounted to 13 million.
In 2019, OŽVS initiated the procedure to complete the partition balance and finally become the owner of this property, but this has not yet been resolved. If these disputes were not resolved in favor of OŽVS and if it had to write off these assets from the balance sheet, it is questionable whether the company would then have assets greater than its liabilities, which is the main condition for restructuring.
Bonus video:
