Czech Republic's Sazka in strategic partnership to avoid bankruptcy

By Caroline Salls

Pittsburgh, Feb. 8 - Sazka AS has entered into a strategic partnership with the Penta Investment Group and E-invest to avert the threat of Sazka's bankruptcy and secure coverage of all of its legitimate payables, according to a news release.

Under the partnership, Penta and E-invest will provide as much financing as necessary to ensure Sazka's full financial stabilization. According to the release, the partnership's long-term goal is to create a national champion of the gaming industry.

"Together with Penta, we are prepared to invest as much as is necessary to terminate the insolvency proceedings against Sazka AS as quickly as possible," E-invest controlling shareholder Martin Ulcak said in the release.

"At the same time, we are guaranteeing an annual contribution in the amount of CZK 200 million for sports associations."

Penta and E-invest will receive a share of the company's profits in return for their investment.

The agreement is subject to company shareholders' consent.

"On behalf of CSTV, which is the majority shareholder of Sazka AS, I guarantee full support of this plan," CSTV chairman Pavel Koran said in the release.

"For us is significant that this ends all discussions about the possible insolvency of Sazka AS and its financial instability.

"Sazka AS is acquiring strong partners and will thus continue to be able to fulfill its role as a key partner for Czech sport. Its shares remain in the hands of Czech sport."

The company said there will be changes in its management in connection with the partnership. A steering committee will be established, which will manage the company together with the board of directors.

In addition, the investors will have a majority in the steering committee, and all important decisions will be subject to its approval.

Ales Husak remains the chief executive officer and chairman of Sazka's board.

"I am convinced that our agreement with E-invest and Sazka AS is the most logical solution," Penta partner Marek Dospiva said in the release.

"We have been interested in Sazka AS for a number of years. We have repeatedly helped in handling its financing and we have declared openly that we are not interested in a hostile takeover but that we are offering a partnership.

"We had to back down from many of our ideas; the result is a pragmatic compromise and agreement that means that Sazka is no longer facing the threat of insolvency."

Sazka also announced that Czech Olympic Committee chairman Milan Jirasek will remain a member of Sazka's board. He rescinded his resignation earlier this week.

Sazka is a Czech Republic lottery company.

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