Tuesday, 07 May 1996
Volume 1, Issue 343
Happy Hungarian Hotels
The Hungarian hotel group Danubius Hotels claims it boosted its
revenues by 17.5 percent in the first quarter of the year
despite a decrease of 3.6 percent in the occupancy. The
average rate of occupancy of 54 percent is roughly in
compliance with the planned 54.8 percent and the company is
obviously pleased that the negative tendency of1995 has turned
and the occupancy level has been maintained or increased.
Danubius stated its prospects are much more favourable for the
second quarter in Budapest than in the base period. In the
January to March period, Danubius posted a net profit of over
2.2 million dollars on net sales of 17 million. Danubius
claims the costs of its sales grew by just over 14 percent,
while its total costs increased by almost 23 percent.
On the Budapest Stock Exchange, Danubius shares peaked at a new
52-week high of 2,320, but by close they retreated to end
unchanged at 2,300 forints.
Hungary's OTP Bank to Enter Gas Shares Market
Hungary's Orszagos Takarekpenztar es Kereskedelmi Bank Rt (OTP)
will offer local governments a deal to sell their shares in
the recently privatised gas suppliers, bank officials said on
"We are trying to offer local governments an overall solution,"
Sandor Csanyi, OTP's chairman told a news conference.
OTP is offering local governments an initial loan of 10 percent
of their shares' nominal value, followed by a payment of 30
percent of the same nominal value later this year. In the
third stage, after selling the shares, OTP would split the
profits with them. Schroders PLC and Hungary's Creditanstalt
Securities would act as financial advisers in the sale.
Hungary's privatisation agency APV Rt sold 50 percent plus one
share stakes in five regional gas suppliers for a total $460
million last December. Local governments, which previously
invested in these utilities, are entitled to about 40 percent,
which they will receive shortly. However, the cash-strapped
authorities would like to see a quick profit while OTP hopes
to realise a higher price over the longer term, bank officials
"The offer only stands if we will be able to handle at least 75
percent of the shares," Csanyi said.
OTP would be able to make a reasonable profit if they sell the
shares at 60 to 65 percent of their nominal value, another
bank official said.
In the case that the local governments accept OTP's offer, the
bank would start negotiations in the spring of 1997 with the
majority owners and foreign investors about the possibility of
"We are primarily looking at the Budapest Stock Exchange," said
Peter Kiss, director of OTP Broker Rt, adding that they would
also be considering listing on foreign bourses, depending on
where the majority of the foreign investors would come from.
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OMRI DAILY DIGEST
No. 89, 7 May 1996
SLOVAK PRESIDENT SIGNS TREATY WITH HUNGARY. Michal Kovac on 6 May signed
the Slovak-Hungarian treaty, Slovak and international media reported.
The treaty was signed by Prime Ministers Vladimir Meciar and Gyula Horn
in March 1995 and ratified by the Hungarian parliament last June. The
Slovak parliament ratified it in March this year, but it was submitted
to Kovac only on 2 May amid continuing discussions between the two
countries' Foreign Ministries over the interpretation of the treaty's
provisions on protecting minority rights. The date and place for the
final exchange of documents still have to be agreed, but Praca on 7 May
quoted a Slovak Foreign Ministry spokesman as saying the remaining steps
before the treaty comes into force will proceed normally. -- Steve
HUNGARY'S SOCIAL SECURITY DEFICIT SET TO SOAR. The Hungarian Finance
Ministry estimates that the country's social security deficit will
amount to 41.3 billion forints by year's end, Magyar Hirlap reported on
7 May. This amount is well above the 17.8 billion forints laid down by
the IMF as a condition for releasing a $300 million standby credit. The
ministry says, however, that the effects of such a large deficit will be
mitigated by a budget deficit that is expected to be below the initial
projection. It is now estimated that the deficit will be 3.9% of GDP in
1996. Following the departure of Finance Minister Lajos Bokros, who was
a strong advocate of radical social welfare reform, the government has
still not revealed a plan to reduce the social security deficit. --
[As of 12:00 CET]
Compiled by Jan Cleave
OMRI SPECIAL REPORT: PURSUING BALKAN PEACE
Vol. 1, No. 18, 7 May 1996
BOSNIAN BRIDGES OPEN. The elections are a key component of civilian
reconstruction, but that work takes on more concrete forms as well. A
reconstructed bridge over the Neretva opened in Mostar on 30 April,
Onasa reported. The DM 5 million project had started in January 1995 and
was finished 43 days earlier than expected. Perez Casado expressed his
hopes that the bridge "will be used for peace and progress in the
future." Elsewhere, IFOR opened a bridge on 2 May over the Sava, linking
the Belgrade - Zagreb highway with Banja Luka at Stara Gradiska. The
bridge was repaired by Hungarian engineers and will initially be
reserved for IFOR and humanitarian vehicles until Croatia and the
Republika Srpska sign an agreement on civilian use. The bridge -- which
used to be known by the ubiquitous "Brotherhood and Unity" tag and which
has been renamed "the Bridge of Hope" -- was destroyed by Croatian
forces on 2 June 1992, AFP reported. -- Fabian Schmidt
Compiled by Patrick Moore