foto: Ministerstvo obrany, Public domain/Tatra
The Promet Group, a minority shareholder in Tatra Trucks, announced rejectition of the recently announced investment proposals of Tatra's management at the general meeting and wants an explanation of the individual steps.
"The Promet Group engineering group, which is a co-owner of Tatra Trucks through its subsidiary Promet Tools, has lost confidence in its top management. Therefore, at Friday's general meeting, it will reject the investment plan proposed by the management and presented in the media. In addition, it will propose to the second key shareholder, the CSG group, joint discussions on the further development of the company and specific follow-up steps," states the Promet Group, which holds a 35% stake in Tatra Trucks, at the beginning of its press release. This is a response to Tatra's June announcement of its intention to invest over CZK 7.3 billion and increase the company's share capital by CZK 2.7 billion.
Promet Group's loss of confidence in Tatra Trucks' management
In its press release, Promet Group explains the reasons for its loss of confidence in the management of Tatra Trucks. First and foremost, it mentions the exceeding of powers, when the management decided, without the approval of the supervisory board and the general meeting, to change the supply chain for Tatra military vehicles by incorporating an intermediary – Tatra Defence Systems, which is not part of the Tatra group. It was with Tatra Defence Systems, which is 100% owned by Michal Strnad's CSG group, that the Ministry of Defense signed a framework agreement for the supply of Tatra trucks to the army, and the Slovak Republic subsequently joined the purchase. This put the manufacturer in the position of a subcontractor. According to Denisa Materová, only the general meeting has the right to make such strategic decisions on behalf of Tatra Trucks: "The management will have to explain how it was possible to take such a step and also comment on whether Tatra Trucks or the end customer was financially damaged by it. And whether they acted with due diligence."
Promet Group further states that the management of Tatra Trucks is providing misleading information about the company's situation to shareholders and the public. It mentions ongoing production and logistics problems, production planning issues, and a shortage of parts for assembly, which are causing downtime and inefficiency. The subject of today's general meeting will also be Tatra's financial results for last year: "Both in terms of their amount in the context of production capacity, including military orders, and in terms of their structure."
The communication with the company's shareholders in the form of a press release in June was itself unusual. "The final impetus for our public statement, in addition to the aforementioned case involving a change in the supply chain, was the media coverage of Tatra's management's historically record-breaking investment plan, which took place without prior presentation, discussion, or approval by the company's owners. This is an unprecedented step in a situation where the management, led by CEO Kristijan Fiket, is asking the owners for CZK 2.7 billion to increase the share capital," says Denisa Materová. She adds that the materials lack an analysis of the market environment and individual market segments, a strategy and development concept, a detailed profit and loss statement, a balance sheet, and cash flow.
CSG: Promet and Denisa Materová have shown their true colors
Czechoslovak Group and Tatra Trucks management immediately issued sharply worded press releases. CSG stated: "The CSG Group strongly objects to the false claims and destabilizing actions of the Promet Group, which, as a minority shareholder, is publicly questioning the legitimate decisions of the board of directors. Promet, which in the past profited commercially from Tatra without contributing any new orders, now refuses to support the investment plan that is intended to move Tatra forward. CSG declares its determination to continue growing and protecting the interests of the company." It quoted the vice-chairman of the board of directors and CEO of the group, David Chour: "Promet and Denisa Materová have shown their true colors. It is laughable that Denisa Materová is now proposing a meeting with Michal Strnad and joint talks on the future of Tatra. She did the same thing a few weeks ago – unfortunately, the calls went unanswered."
Tatra's management wrote: "Tatra Trucks strongly rejects the claims made in the press release by minority shareholder Promet Group, which seeks to undermine confidence in the company's current management, its strategic decisions, and its financial results." This is a strange formulation, because Promet Group is not "attempting to undermine confidence in the company's current management," but explicitly states that it has lost this confidence in the management as a shareholder of the company. Regarding the change in the supply chain and the use of an intermediary, Tatra Defence Systems, the management of Tatra Trucks claims that it acted fully within the limits of its legal powers under the law. According to CSG, "Promet Group has benefited from Tatra's supplies for years without bringing a single order to the company. And now, when Tatra has a real chance to grow to practically twice its size, hire hundreds of employees, and bring significant investments to the city and region, it is turning its back on the development proposal."
The position of STV will be key
The STV Group has not yet commented publicly on the situation. STV Invest acquired a stake in Tatra in April this year through the purchase of a 50% stake in Promet Group, which is still subject to approval by the Office for the Protection of Competition and Consumer Protection (ÚOHS). STV has previously stated that it will not comment on Tatra matters until the antimonopoly authority has given its approval. While Promet Group only has friction with Czechoslovak Group in relation to Tatra in Kopřivnice, the STV group is a competitor of CSG in a long list of projects. STV's position will be key to further developments at Tatra, and a scenario in which the two arms giants reach an agreement in certain respects, including the settlement of disputes over Tatra, cannot be ruled out.
The investment plan currently being discussed at the general meeting means an increase in Tatra's share capital of almost one billion crowns for Promet Group and, therefore, also for STV. To what extent the management of Tatra and the majority shareholder CSG wanted to oust minority shareholders, and to what extent the whole plan is a business deal between the two largest arms groups in the Czech Republic, remains to be seen. In any case, it would be bold to question that this is primarily about the development of the car manufacturer: this is certainly not reflected in the style of communication, which consists of sharp press releases.
Denisa Materová, owner of Promet Group, said in a press release: "We are acting as a responsible owner. In order for Tatra to invest and grow effectively, its management must first fix what is not working, be transparent about its results, communicate with the owners, and prepare a professionally drafted investment plan. As this is not currently the case, we do not intend to entrust any further funds to the current management (...) We are aware of our great responsibility towards Tatra's employees and the region from which it originates and with which it has been associated for more than a century."
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