The Igalo Institute had 6.000 more overnight stays from February to September this year than in the same period last year, while the company had revenues of almost 10 million euros. The institute hopes for stable business in the coming period, so that they can participate in the tender in the fall of 2026 - and in the coming years, host patients from Norway again.
This was stated by the executive director of the Simo Milošević Institute in an interview with "Vijesti". Zoran Kovačević.
Kovačević emphasized that they have settled all their obligations to companies that are not owned by the state or the Municipality of Herceg Novi, that they will pay off the remaining debts by the beginning of 2026, and that there are currently no delays in paying salaries to employees...
"After analyzing the results for the first eight months of operations, we can express satisfaction with what has been achieved. When we look at the physical indicators from the beginning of February (when we started working with users after the regular annual winter break) to the end of August, we see that we achieved 6.000 more overnight stays, or 114.531 this year compared to 108.539 overnight stays in 2024. Financial income from operations for the observed period is also good, close to 10 million euros," he emphasized.
The state-owned health resort's account was initially blocked at the end of 2023, with the company spending the first half of last year on the brink of bankruptcy due to debt to "Jugobanka", while the Government and the largest minority shareholder of "Vila Oliva" failed to reach an agreement on rescuing the company and providing interest-free loans of five million euros each. At that time, a restructuring plan for the Institute was announced, which was adopted at the end of February this year, and was estimated at a total of 88 million euros, with an urgent recapitalization, in order to provide 21,5 million euros to settle liabilities and avoid bankruptcy.
The company ended last year with a profit of 320 thousand euros, which is the first business year with a positive result since 2018.
They want Norwegians by 2030.
Kovačević also emphasized that in the period until the New Year and the winter break, they will try to better organize their work and shorten the waiting period for the start of rehabilitation for funded patients and, at the same time, serve other users from the domestic and foreign markets. The Institute, among other problems, has been losing money for years due to the prices that the State Health Insurance Fund (FZO) paid for the rehabilitation of its insured patients, which were far below the market price. This was corrected in November last year, since when the prices have doubled.
Kovačević nevertheless announced that in the fall of next year, they plan to participate in a tender to bring Norwegian patients back to the Institute.
"Given that due to instability in the operations of the Igalo Institute during 2022/2023, and prior to my arrival as executive director, the contracted four-year cycle was interrupted and transferred to Balçova, Turkey, we expect that a new competition for the period from 2027 to 2030 will be announced in the fall of 2026. I hope that by then we will maintain stable operations and prepare appropriate capacities in accordance with the Restructuring Plan to competitively apply and restore part of the "Norwegian Program" to the Igalo Institute," he said.
The Institute did not host patients from Norway last year because it did not pass the tender of the local Health Fund, due to the situation and problems the company was in during 2023 with frequent account blocks, inability to invest in improving the offer and delays in paying salaries. Guests from this country annually brought the Institute around 2,7 to three million euros, or about a quarter of total revenue...
Asked about the firefighters who fought fires across the country this summer, who were promised a seven-day stay at the Institute by the Government, Kovačević stressed that the Ministry of Health is responsible for the operationalization of that program. He pointed out that a medical/rehabilitation package has been agreed upon (seven days, full board in a double room with medical examinations and three therapies per day), as well as the budget for that program, and that it remains to align the possibility of their arrival with the capacities of the Institute.
They gradually pay off debts
He also explained that the restructuring plan is currently working on the realization of the financial obligations of the majority owners, which will be followed by the recapitalization process, which is why the Shareholders' Assembly has been scheduled for October 21. Kovačević emphasized that the Institute fulfilled its part of its obligations for this year through the sale of the former children's department, as a financial participation in the realization with disinvestment.
The Government is planning to build a school on the site of the children's ward in Igalo.
"These funds were mainly spent on settling outstanding liabilities to creditors that are not owned by the state or the Municipality of Herceg Novi. I hope that these liabilities will be resolved by the end of this year or at the latest at the beginning of next year. We have resolved all liabilities to creditors that are not owned by the state or the Municipality of Herceg Novi. We regularly pay our employees their net salaries in full, and in that sense we have no debts. There is a debt for contributions, which I hope, as I said, will be settled by the end of the current year. In the meantime, we are settling, according to the appropriate decision of the authorities, the complete debt for contributions to all employees who retire, so that they resolve their pension status as soon as possible. As for the business results, I believe that we will operate positively this year as well," Kovačević emphasized.
From June to October, the Igalo Institute also rented out rooms with breakfast in the first phase, located on the sea foam in Igalo, in order to increase income and use the space before the planned reconstruction. The first phase is located along the "Pet Danica" promenade and it rented out single, multi-bed rooms and apartments, for a minimum of seven nights, with a bed in a double room with breakfast costing from 33 to 35 euros per day, while a single room cost 53 to 55 euros.
Kovačević also emphasized that the rental of the first phase of the Institute went well, but that due to the condition of the facilities, they did not expect high income, but as "good hosts" they wanted to use them before the start of their reconstruction. He pointed out that they are satisfied with what they have achieved, but that these incomes are still modest, considering the fact that they are located right on the coast...
Kovačević emphasized that serious consideration should be given to what the priority is in the reconstruction of the capacities available to the Institute, and that the owners will decide on this, while management can only offer them recommendations in accordance with their expertise and experience.
Capital increase at the end of October
The shareholders' meeting of the Igalo Institute is scheduled for October 21st, with the agenda to consider the decision to recapitalize the company by 23,5 million euros. According to the draft decision published on the Montenegro Stock Exchange website, the recapitalization will be carried out by issuing 152.066 shares at a nominal price of 154,93 euros.
It will be carried out in a maximum of two rounds, the first lasting 30 days, in which current shareholders will receive new shares at a price of 154,93 euros by paying money into a special account of the Institute. In the first round of recapitalization, shareholders can purchase new shares in proportion to their current percentage of ownership.
According to the percentage of ownership, the Government with 57 percent of the shares should invest around 13,5 million euros in this process, and "Vila Oliva" around seven million because it has 29,7 percent of the shares. The remaining small shareholders who have around 13 percent of the shares can participate with around three million euros.
The current stock exchange price of the Institute's shares is 56 euros, while in the previous procedure, which lasted until the beginning of September, the Government and the largest minority shareholder "Vila Oliva", jointly purchased 3.394 shares from other small shareholders at a price of 58 euros.
The restructuring plan envisaged the sale of the Institute's former children's department to the state for 4,8 million euros, which was already done in early April, as well as a capital increase of 23,5 million. The money from the sale of the children's department and the capital increase is intended to pay off debts and invest in improving the Institute's services.
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