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The Buzz in Slovenia: Interview with Uros Ilic of ODI Law

The Buzz in Slovenia: Interview with Uros Ilic of ODI Law

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Things are stable in Slovenia at the moment, according to ODI Law Managing Partner Uros Ilic. "The last few year were extremely busy because of the previously-distressed situation in Slovenia," he explains, "but now things are back to normal. On the M&A side you will not have as many large deals as in recent quarters, since the privatization work stream has completely dried up. A few deals in the pipeline, but nothing of a very big size. The sale of Cimos has finally been successfully concluded, the Gorenjska Banka sale and Cinkarna Celje are in process, and a few transactions are still in the pre-marketing stage  It seems that we are also no longer the hot spot for NPL buyers, hedge funds and the like, as normal growth activities/business activities are back."

Everybody is still looking towards the NLB deal, according to Ilic, referring to the long-awaited IPO of Slovenia's largest bank, which was famously put on hold following the Brexit decision. "This is probably the last fundamental jewel from the nationalism perspective," Ilic reports, describing the bank as "the heart of the financial system in Slovenia." He continues: "If this flies, everything is available. If the government does not sell it, we are in tighter spot for foreign investors. So that's why this has greater significance even than as a stand-alone transaction." Unfortunately, says Ilic, "now we're seeing last minute complications, as the supervisory board (of the Slovenian Sovereign Holding) has refused to grant its consent for the proposal of the offer price range for NLB share, and thus is trying to put the burden of the transaction directly on the government acting as a  shareholder." As a result, he says, "there's a fight among coalition parties- with each trying to avoid responsibility for an unpopular transaction. It is very likely we will see another hang sale since elections are coming up in less than a year and politicians are not immune to public perception. It might happen that the EU Commission takes over the sale process entirely or that NLB  subsidiaries will be quickly sold. "

Otherwise, Ilic says, some sectors remain busy, as "a couple of real estate deals are coming towards closing, with Merkur being one of them. It seems that real estate is now the most viable industry." There is also the potential for significant direct investment from Magna, Ilic reports, which is looking to expand on its existing unit in Graz and is considering building a greenfield operation in Slovenia. "The Government is offering them help and financial incentives to build an automotive unit here, but several local environmental groups are opposing the construction of what they believe will be a polluting site." He says that those groups are seeking a referendum which may stop the construction.

The building of a second railway track for the Koper harbor to facilitate the transport of products inland from the port remains the largest controversial infrastructure project in the country. Ilic reports there may be another referendum on this matter as well, "not this time over environmental issues, but over financing and costs." He says that the strongest opposition political party is seeking to deny the government a victory by supporting those demands.

Finally, on the subject of the fallout in Slovenia from the Agrokor/Mercator crisis in Croatia, Ilic reports that his country has created the so-called "Lex Mercator law -- essentially copy/pasted from Lex Agrokor idea." Still, he says, it's less of an issue in Slovenia than in Croatia.  "Basically we do not see the same pressure and discussion as in Croatia. Everybody's aware that at some point Mercator will most probably be sold to a new buyer, either in a package deal with Konzum, or as a single deal, but for the time being it seems to be self-sustainable, the debt is regulated by the Master Restructuring Agreement." He smiles, saying, "for the time being everybody's getting paid, the shelves are full -- my wife is a regular shopper there and hasn't seen any problems."

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