ECONOMY

Divac goes for water

BELGRADE – Serbia has given the country’s top mineral water producer Knjaz Milos less than a month to strike a deal to sell US basketball star Vlade Divac a majority stake, as it pushes a privatization plan to shore up the state budget. The two parties, negotiating under government supervision, were given a September 6 deadline to seal a strategic partnership, the State Privatization Agency said on Friday. Knjaz Milos and Divac, the 216cm (7′, 1») Los Angeles Lakers center, entered talks about a partnership last year, prompting the government to kick out of the bidding such industry majors as Coca-Cola, Danone, Nestle and Croatia’s Podravka. The agency stopped short of saying whether it would call a tender if the water company and the National Basketball Association star did not complete a deal before the deadline. Urgent privatizations Friday’s move marked a new bid by Prime Minister Vojislav Kostunica’s conservative government to speed up the sale of state holdings to fill in a budget gap, after central bank warnings that high public spending was pushing inflation above the 8.5 percent target. «Knjaz Milos and Divac signed a memorandum of understanding last Friday. It is not a binding document yet, but only establishes grounds for negotiations,» a Privatization Agency source, who asked not to be named, told Reuters. «They are negotiating about Divac becoming the majority shareholder. We are involved in the talks because we, as the agency, need to protect the state’s interests,» the source added. The state owns 41.28 percent of Knjaz Milos. The Privatization Agency is managing the sell-off of Serbian firms, many of which were partially privatized in the late 1990s under a law that allowed a distribution of capital to workers and pensioners free of charge, keeping 40 percent stakes in companies for the state. A strategic partnership between Divac and Knjaz Milos would imply a recapitalization of the firm and the possibility of Divac buying shares held by the state and small shareholders, the agency said. «The strategic partnership will secure significant investments to upgrade and develop the Knjaz Milos production program and strengthen its leadership in the region,» it said. Neither Divac nor Knjaz Milos’s general manager were immediately available for comment. The management of Knjaz Milos has been against privatization via a tender, calling for a capital increase instead. Managers of Serbian firms partially privatized in the 1990s have often resisted strategic partners, preferring non-industry minority investors, in hopes of retaining senior jobs and control over small stakeholders. Knjaz Milos said last year its capital was worth around 55 million euros ($67.4 million), while analysts estimated its market value around 100 million euros. Knjaz holds some 60 percent of Serbia’s mineral water market.