Sava of Slovenia to Sell Lender Abanka to Cut Debt

Sava Group d.d., Slovenia’s rubber maker that reported a loss in the first nine months of the year, wants to sell its stake in lender Abanka Vipa d.d. to cut debt.

Sava is ready to sell 23.8 percent of Slovenia’s third- biggest bank by assets, the Kranj-based company said in a filing to the Ljubljana stock exchange today. The sale is scheduled for the first half.

“The sale of Abanka would lower the net indebtedness of the company, which at the end of October amounted to 281 million euros,” Sava said in the statement. Sava is in talks with otherAbanka investors to sell their holding, which may surpass the 50 percent level in the Slovenian bank. The single biggest investor in Abanka is insurer Zavarovalnica Triglav d.d. with a 25.6 percent stake.

Slovenian companies are struggling to remain profitable after the worst recession in Europe in seven decades. Sava reported a nine-month loss of 80.3 million-euro ($110 million) on writedowns from its investment in Merkur d.d., the Slovenian homeware and construction retailer that declared insolvency in September.

Economic Recovery

Slovenia’s export-driven economy, which dropped the most among the 16-nations sharing the euro last year, is set to advance 1.1 percent this year, according to a Nov. 18 estimate by the Organization for Economic Cooperation and Development.

“The sale announcement is somewhat surprising,” Bojan Ivanc, an analyst at Ljubljana-based KD Banka d.d., said in an e-mail. “It will be difficult for Sava to get a high price for its stake because impairments in the banking industry are still rising.”

The Adriatic country’s three largest banks, Nova Ljubljanska Banka d.d., Nova Kreditna Banka Maribor d.d. and Abanka, had their ratings cut in September by Moody’s Investor Service because of their struggle with non-performing loans. Bad loans in the industry are the main drag on the Slovenia’s economic recovery, central bank Governor Marko Kranjec has said.

Both Abanka and Sava were unchanged in trading on the Ljubljana stock exchange at 10:50 a.m. Abanka has lost 8.6 percent of its value since the start of the year, giving the bank a market value of 348.4 million euros. Sava dropped 37 percent since the start of the year, which compares with a 12.5 percent drop by the benchmark index SBITOP in the same period.

(Source: http://www.bloomberg.com/news/2010-11-19/sava-of-slovenia-seeks-to-sell-abanka-to-lower-debt-after-nine-month-loss.html)