The company’s Management Board presented to the Supervisory Board a process of a long-term financial consolidation of business operations of the Istrabenz Holding which is proceeding through discussions with business banks, i.e. creditors of the Holding Company. With the purpose of finding an efficient and transparent solution tool, pursuant to the good practice the Management Board proposed to the banks an appointment of a consortium to be formed by representatives of banks-creditors, including the banks servicing both the Holding Company and the subsidiary companies. According to the estimation of the Management Board, the process which started last December with the elaboration of an own detailed evaluation of financial position of the Holding Company and the elaboration of a projection for the year 2009, is developing successfully and is expected to continue until March 2009. The final result of the above-mentioned process will be a combination of solutions and measures that will enable a short-term bridging of the financial crisis and at the same time, it will provide conditions for a financial consolidation of the Holding, granting its further development.

The Supervisory Board supported the activities of the Management Board related to discussions with the business banks and estimated such approach as appropriate. In the opinion of the Supervisory and Management Board respectively, any rush disposal of strategic and portfolio investments at prices that result to be at the lowest level of the last years and which does not reflect their actual growth potential, would not be reasonable. Therefore, the Supervisory Board is of the opinion these measures would not be in the interest of the Holding shareholders and in the interest of the banks.

In addition, the Management Board and the Supervisory Board respectively agreed that in order to protect the business confidential data resulting from the contacts between the Holding Company and the banks and by considering that this process is not finished yet, the company is at the moment unable to disclose to the public more details resulting from its discussions with the banks.

The Supervisory Board obtained the information of the Management Board regarding the difficulties of the Istrabenz Holding d.d. with the renovation of resources of short-term loan hiring and accepted the explanation of the Management Board stating that even by considering the fact that financial investments are registered in the books of account each time according to their market value and that the investments in the subsidiary companies are valuated as per purchase prices, the Istrabenz Holding d.d. does not have a negative capital. In addition, the Supervisory Board accepted the explanation of the Management Board stating that in the case of the Istrabenz Holding d.d., there are no other conditions which might impose to proceed in line with the Financial Operations Act related to procedures imposed by insolvency or compulsory termination of company’s operations.

The Supervisory Board imposed to the Management Board to pay, in the given circumstances, a special attention to the risk management and after stating the liquidity risk, to make an own evaluation regarding the required operating capital.

The Supervisory Board ascertains that the present unfavourable ratio between the capital and the company’s loan is a consequence of unfavourable movements in the capital markets that in the year 2008 substantially decreased the value of some investments of the Holding Company and consequently, caused a temporary decrease of company’s capital. The Supervisory Board believes that current market prices of some Istrabenz investments are a consequence of great uncertainty which is going hand in hand with the financial and economic crisis and that the market prices will increase following the improvements in the financial and economic system, resulting in a more favourable ratio between the capital and the loan of the Holding Company.

During the course of the meeting, the Management Board of Istrabenz informed the Supervisory Board about its ongoing discussions with the company Petrol, d.d., Ljubljana. The discussions between the companies are focused on polling potentials in the field of energy business, being this reasonable, necessary and in the interest of both the companies, with Istrabenz d.d. insisting that such cooperation be based on principles of equal cooperation. The Supervisory Board was also informed that the Supervisory Board of the company Petrol rejected the appointment of a nomination committee and that an already formed commission of the Supervisory Board of Petrol will prepare the proposals for new candidates to form the Supervisory Board of Petrol.

Being the investment in the reconstruction of the Hotel Palace accomplished, the Supervisory Board imposed to the company’s Management Board to obtain from the management of the company Istrabenz Turizem d.d. a final financial report on the investment including explanations concerning the exceeding of the planned investment value.

Pursuant to legal provisions of the Companies Act (ZGD-1), the Supervisory Board formed a revision commission and accepted the information on company’s financial calendar for the year 2009.


Janko Kosmina
President of the Supervisory Board
of Istrabenz, d.d.