Eureko filed a Call for Settlement Attempt with MST

In connection with today’s press publications, Eureko informs that on the 15th of January 2009, it submitted, in the Regional Court for the city of Warsaw, a Call for Settlement Attempt with the Ministry of the State Treasury. The document contains a detailed proposal for the settlement of the dispute over the process of privatisation of PZU. In filing the Call, Eureko hopes finally to terminate the long-lasting conflict over the process of privatisation of PZU by finding an amicable solution.

On January 16th 2009, Eureko provided the Ministry of the State Treasury with a copy of the Call for Settlement. The contents of the Call show that Eureko is willing to make two major concessions: to waive the total amount of the damages it claims in the arbitration procedure, and to waive its right to immediate majority control of PZU.

The main elements of Eureko’s proposal are:

  1. The Ministry of the State Treasury sells a 21% shareholding of PZU to Eureko at the price of PLN 116.5 per share (the price Eureko would have paid in 2001 if the privatisation agreements were duly executed), no later than by the end of March 2009.
  2. PZU’s IPO takes place no later than the end of November 2009.
  3. Within the framework of the IPO, both Eureko and the Ministry of the State Treasury will each sell 10% of PZU (20% in total).
  4. Eureko undertakes to keep its shareholding in PZU below 50% for a period of three years after the date of the IPO
  5. Once the 21% of PZU has been transferred to Eureko, Eureko is ready to waive the total amount of the damages claimed, and to close the arbitration procedure.

The proposal is clearly favourable, as it is in the interests of the Ministry of State Treasury (MST), Eureko is making major concessions, whereas the MST makes none. Additionally, the settlement is achieved in front of a Polish court, which has long been the State Treasury's goal. The proposal means that:

  • The Polish tax payers will not have to finance any damage payments to Eureko that would result from the arbitration award proceedings,
  • The State’s budget will receive proceeds from the sale of PZU’s shares to Eureko, and also at the company’s IPO
  • The situation of PZU will finally be stabilised as it will become a flagship financial services company, listed on the Warsaw stock exchange, and to the benefit of all its shareholders
  • Both individual and institutional Polish investors will finally be able to invest in PZU in a regulated market

If the proposal is rejected and no compromise is reached, the only alternative for terminating the dispute over PZU’s privatisation process will be to wait for the Arbitration Tribunal to rule on the amount of damages to be paid to Eureko in recognition of the State's failure to execute the privatisation agreements.

For further information, please contact:

Agata Strzałkowska, ComPress S. A.
Mobile. +48 609 301 435; Tel. +48 22 812 68 35;
e-mail: astrzalkowska@compress.com.pl