In accordance with the provisions of the Ljubljana Stock Exchange d.d. Rules and the applicable legislation, Sava d.d. Škofjeloška cesta 6, 4000 Kranj, informs its shareholders and a broader public about the sale of Rubber Manufacturing and further steps in the implementation of the restructuring strategy of Sava.

 

Based on the consent by the Supervisory Board of the company, the management of Sava d.d., signed the contract on the sale of Rubber Manufacturing yesterday evening, on 25 October 2012. The selected strategic partner and the signatory of the already concluded contract is the Czech rubber company ČGS a.s., which has emerged as the winner from this competitive sale process.

 

About the sale of Rubber Manufacturing and further steps in the implementation of the restructuring strategy of Sava

The sales of Rubber Manufacturing represent one of the major milestones in the restructuring strategy of Sava until 2014 as adopted last September.

Matej Narat, MSc, President of the Management Board of Sava d.d.: »After this year's sale of the core part of the Real Estate division, we have successfully finalised the project of selling Rubber Manufacturing too. Rubber manufacturing group ČGS is a trustworthy strategic partner possessing a comprehensive vision for the development of Rubber Manufacturing, which is why, we are confident that Sava's rubber manufacturing business was placed in capable hands.«

 

In the present situation, which Sava is experiencing now, there aren’t enough possibilities for the needed development of Rubber Manufacturing, and at the same time this is the only Sava’s asset of sufficient volume that in the present situation can assure a significant deleverage (and could be sold at fair value, respectively), and for which a positive transaction environment for making this deal existed at the same time. After selling Rubber Manufacturing, Real Estate and, in the future, also Energy Management, whose sale is just being finalised, the second phase of the restructuring strategy will be completed at the end of 2012.

»The key effect of the carried out sale is reducing the debt to the level, which is significantly nearer to the sustainable level; I am actually talking about decreasing the debt by €100 million since the new strategy was adopted and began to be implemented, respectively. This is also not an unimportant fact in view of inflows of new cash of foreign sources in the Slovene banking system. After this deleverage, we expect to make a restructuring agreement with the banks, which will provide us with some time to enhance the value of investments and further reduce debts. By doing this, a transit of the renewed Sava to a new strategy phase will be facilitated, which is focused on bank investments and Tourism with the aim of enhancing the value of our assets and continue to reduce debts,« emphasised Narat.

After the restructuring strategy is completed, the new, renewed Sava will include:

• Sava d.d., a cost-efficient holding of associated and subsidized companies that is highly adapted to the circumstances in business environment.
• The renewed Tourism division, a more rational and successful one.
• The stakes in both banks or in a tied-up bank and other investments, respectively, particularly in the financial sector.

 

In 2013, we are transiting into the next restructuring strategy phase, which is featured with further deleveraging and enhancing the value of assets based on the improved operative business and improved circumstances in the market. In this next phase, the principal activities of Sava d.d.'s Management Board will focus on the consolidation of Tourism, which, undoubtedly, has a high growth potential. One of our major priorities includes a tie-up between Abanka Vipa d.d and Gorenjska Banka d.d. Along with high synergetic effects of a tied-up bank, we also expect the market environment to improve, which together with keeping a significant share in a tied-up bank will facilitate not only a further deleverage but also assure a high dividend yield.

 

In accordance with the restructuring strategy, Sava will be a listed company, which concentrates on restructuring by:

• Systematically enhancing the volume of large scale businesses (Sava's Tourism, banks) with a high growth potential (through improving efficiency, encouraging synergies, decreasing costs).
• Actively manage its portfolio of investments.

 

The entire restructuring process will be completed at the end of 2014 when the conditions for a repeated growth of the renewed Sava will be created.

»I would like to thank all the stakeholders who support us in the implementation of the envisaged strategy, « said Narat on this occasion.

Aleš Skok, Chairman of the Supervisory Board of Sava d.d.: »I congratulate all for the implementation of this significant strategic decision, which brings about a »win-win-win« situation to all three partners, the holding company Sava d.d., Savatech and ČGS. The decision to sell Sava's successful divisions Rubber Manufacturing was, by all means, not an easy one. It was outlined in the restructuring strategy of Sava adopted after the new Management Board assumed their office in 2011. The Supervisory Board is of opinion that the sale process was managed in a transparent manner and with a suitable dynamics. We estimated that the price achieved in the negotiation process and other elements of the agreement, in the given moment and economic circumstances Sava d.d. is experiencing, provide a good basis for granting a consent to the transaction. When making a decision, it was, by all means, not an important fact that the selection of ČGS as a suitable strategic partner had been confirmed by the management and the employees of Savatech. The position of the Supervisory Board is that the selection of the strategic partner and the decision for the sale was a reasonable and optimal solution for all the involved, both in view of existence and promotion of further development of the Rubber Manufacturing companies as well as Sava d.d. and its new, remodelled Group. The Supervisory Board extends its full acknowledgement to the Management Board of Sava d.d. for the successful implementation of this project, which they managed to carry out event faster, half a year earlier than originally planned. I estimate that with this move the Management and Supervisory Boards of Sava d.d. communicated a clear message to the shareholders, banks and other stakeholders about their fast and determined implementation of the envisaged strategy that will build a solid platform and assured a renewed growth of the new, remodelled Sava. I am inviting all the stakeholders to further support us on this path for the benefit of all.

I wish the company Savatech and its management a successful development under the wing of the new strategic partner, the ČGS company.«

 

About managing the project of selling Rubber Manufacturing

The sale process, which included international strategic and financial investors, was carried out by the independent specialised international investment bank EquityGate Advisors GmbH from Germany, whose experienced team successfully finalised more than 250 transactions in the value of €6 billion in the past six years and which has a permanent access to all leading investors. The company already received numerous international acknowledgements and awards for its excellent consulting services. The legal advisor in the sale process was the law firm Jadek & Pensa from Ljubljana, while the entire process was directed by a supervisory team consisting of the members of the management of Sava d.d. and Savatech, d.o.o., in cooperation with numerous associates.

The sale of Rubber Manufacturing includes 100% shareholding of Savatech, d.o.o. with daughter companies (five foreign trade network companies and the company Sava Rol d.o.o., Zagreb, and Sava Medical in storitve d.o.o.), and a 60% business share of Sava Pro d.o.o. with its daughter company Sava Rus d.o.o., Jaroslavl. Savatech d.o.o. is a successful company having a leading position in the world market niches of industrial rubber products for the construction, automotive and graphic industries, environmental protection, while also developing new products to enter new sectors.

 

The sale process of Rubber Manufacturing

The sale process of Rubber Manufacturing began in the beginning of 2012, the project was headed by Andrej Andoljšek, member of the Management Board of Sava d.d., who introduced the sale project and its fundamental features.

49 selected investors expressed their interest in buying, after signing a confidentiality agreement 23 partners received the Information Memorandum, on the basis of which 5 investors submitted their indicative offers. In June, three of them were invited to submit their binding offers. The negotiations with the partners were carried on in the following months, during which time the management of Sava d.d. also agreed with the Goodyear corporation (or its company Goodyear Dunlop Sava Tires d.o.o.) on the continuation of business cooperation with Savatech d.o.o. and other Rubber Manufacturing companies, which in addition to other areas, where synergies arise, also includes the issues with regard to the use of the Sava trademark.

»Among the bidders, the Management Board of Sava d.d. selected the Czech rubber manufacturing group ČGS a.s., which will assure the best comparative conditions for a long-term strategic development of Rubber Manufacturing as a whole, and its employees. For the shares of Savatech d.o.o. ČGS a.s. will pay purchase money of €69.4 million, which surpassed our original expectations and it proves that significant synergies exist between both companies.

As agreed, the total amount of purchase money will be effected already prior to the end of this year after the fulfilment of suspensory conditions from the contract,« pointed out Andoljšek.

 

About the Czech rubber manufacturing company ČGS a.s. and the motifs for the acquisition

The Czech rubber manufacturing group ČGS a.s. is a multinational firm, which employs 6,000 associates and whose beginnings reach back to 1908. From then on it gradually acquired new rubber companies and engineering plants. The company ČGS a.s. incorporates two divisions: MITAS, a.s., the main company of the group producing tyres for road and non-road use (tractors and construction machinery), Rubena a.s. as the core of technical rubber operations. They have production plants in the Czech Republic, Serbia, and this year they opened a plant in Iowa, the USA.

In the ČGS Group, tyres have 80 % share in sales, technical rubber products now represent about 20%. In the past three years the ČGS Group enhances its equity by 60%, mainly through building plants but also through acquisitions of companies in the rubber manufacturing sector, in which the Group wishes to have a role of a niche player. 

Tomáš Němec and Oldřich Šlemr, the members and co-owners of the Czech Holding ČGS a.s., who have many good experiences with acquisitions, in which a number of new jobs was opened, are confident that the acquisition of Savatech and its companies represents an important gain for ČGS.

 Tomáš Němec: »The decision to buy was an easy one for us. Owing to its excellent products and services, advanced technology expertise, experience and reputation, which have all been confirmed with good business results, the company Savatech represents an important acquisition and a great opportunity for our business system. Our vision is to make Savatech and Rubena under the ČGS ownership a leading player in the industrial rubber products sector in Europe. ČGS has a long-term strategic interest in further developing the company Savatech in all present sites. ČGS will ensure all necessary  investments required for utilisation of the potential for further growth of this up till present Sava's division Rubber Manufacturing.«

 Oldřich Šlemr: »ČGS welcomes the management team of the company Savatech and all of its employees in its Group and wishes to express that it highly respects the quality management team and all employees at Savatech, their know-how, expertise, skills and innovative approach. ČGS will keep all of 964 employees of the company Savatech. This acquisition complements the strategy of the ČGS company which plans to strengthen the production of industrial rubber products. Moreover, Savatech has an impressive 45-member R&D team, who in cooperation with the Rubena research team will be able to develop many new products for the pipeline sector.«

Both co-owners of the group ČGS thanked also the Government of the Czech Republic who supported this investment, and they further thanked the management of Sava d.d. for a good cooperation during the process.

H.E. Petr Voznica, Ambassador of the Czech Republic to Slovenia: »The Embassy of the Czech Republic was pleased to receive the news about entering of ČGS into Sava. This is, by all means, a confirmation of good and continually developing relations between both countries. The Embassy joined the process in the final phase of the procedure and played a role of a mediator among the relevant institutions in Slovenia. The management of ČGS enters in Sava with its own capital and with a support and guarantee of the Government of the Czech Republic. The acquisition of Sava's Rubber Manufacturing division is the largest investment that the Czech Republic has made in Slovenia in general, and it was strongly supported by the Government of the Czech Republic. I am therefore confident that the rubber manufacturing business in this site will continue to successfully attain the set goals, at which the economic cooperation between both countries will be strengthened. On behalf of the Czech Republic I congratulate and wish all the success.«

Uroš Rožič, MSc, State Secretary, Ministry of the Economic Development and Technology: »This is the largest foreign direct investment in Slovenia in this year and one of the results of the endeavours by the Government of the Republic of Slovenia to improve the business environment. I wish to thank the Government of the Czech Republic, who recognized Slovenia as an important investment partner. The Government of the Republic of Slovenia wishes continued development for Savatech and it remains available in the case any needs appear for the support in the future.«

Igor Hafnar, director of the company Savatech, d.o.o.: »In the past years Savatech achieved an outstanding growth and had  further investment needs and plans which recently it could not implement under the ownership of Sava d.d., and in the given volume of operations it had limited strategic opportunities at the same time. Bigger competitors gain advantage in terms of purchasing, geographic reach as well as other benefits in terms of the scale and scope of operations. We therefore welcome the selection of the strategic partner, the Czech rubber manufacturing company ČGS a.s., which within the framework of its rubber manufacturing will enable this operation to develop further.  We firmly believe that the company Savatech will continue to operate successfully and that also due to the synergies arising from the rubber operations in the ČGS Group, while at the same time it will preserve jobs -  a vital factor in this crisis period.« 

Vesna Čadež, director of the company Savatech, d.o.o.: »Both the management and the employees welcome the holding ČGS as a new owner, which with its development until now has proven what it means to be a good manager. We believe that Sava’s Rubber Manufacturing has passed under the wing of a good owner.«

  

Any important changes to data in the company's prospectus shall be promptly released in public announcements on SEOnet of the Ljubljana Stock Exchange. This public release will also be available on-line at the address www.sava.si as of the day of the announcement for a period of 5 years.