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The Warsaw Voice » Other » September 2, 2009
Economic Forum in Krynica
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Ensuring Pluses From Privatization
September 2, 2009   
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Dariusz Tokarczuk, managing partner at the Gide Loyrette Nouel Law Firm, talks to Beata Gołębiewska-Chęciak.

You have considerable experience in privatization transactions-what role can a law firm like GLN play in a company's privatization?
I don't know of any cases where a privatization was carried out without a law firm being involved. We are asked to support the investor at all stages of this process. We take part in preparing a proposal meeting ministry standards. We conduct a legal audit of the company our client is interested in acquiring. We play an active role in the negotiations-though these have a rather restricted scope in the case of privatization. We also represent the client before the Office of Competition and Consumer Protection.

Do you handle many such transactions? Do you expect a big wave of privatizations in Poland in the near future? If so, why and in which market segments?
We have handled quite a few transactions of this kind. There were fewer in 2005-2008, because there were fewer privatizations on the market at this time. Things have picked up a little now; we advised the investor in the privatization of KOLTRAM-Poland's first privatization auction, and we are working on the privatization of PZL ¦widnik-this should be resolved any day.

I think we can still do more and the market has more capacity. There are several projects that our clients are looking at carefully. We assume that if the ministry starts new privatizations before the end of the year, as it has announced, then even more work awaits us, especially since the plans are ambitious. The ministry wants to offer companies from the chemical sector, Polfa [pharmaceutical] factories (in this case, we represent the vendor, Polski Holding Farmaceutyczny) and power companies.

Your law firm works for Poland's chemical sector-what state is this sector in?
The situation of the major chemical processing companies is tough today. The condition of many companies leaves much to be desired. They are painfully feeling the effects of the global crisis (fewer orders) and the consequences of problems with currency options.

Do you think the sector needs far-reaching changes, including regulation? If so, what shape should these take?
I support the sector's privatization. A government stake in chemical companies has no special justification. I don't think the production of chemicals has any strategic importance, for the country's security for example. I do think, however, that the government let slip the best moment. A year ago every company put up for sale stood a chance of going for a better price-they were simply in better condition. In addition, the government's current idea to sell three giant companies together could limit the number of prospective buyers, especially if we're talking about investors from the sector. Maybe a financial investor could be found, interested in acquiring all three companies, restructuring them and then selling them on to a sector investor.

What is your view on Polish privatization law? Are there any regulations that should be changed to make privatization transactions more efficient?
The law works. There's always room to improve certain procedures, but no special revolutions seem necessary in the regulations. I think the actual process of preparing a company for sale is needlessly lengthy. We learned in October 2008 that a company in which one of our clients is interested was to be put up for sale. A good many months have passed and all we know is that a privatization adviser has been chosen. The privatization itself has not started yet. During that time the prospective buyer could have changed their plans several times, not to mention the fact that they might have paid more for the company last fall.

Auctions could be an interesting alternative to traditional privatization negotiations (they are much simpler and shorter). Of course the rule that whoever offers more becomes the buyer cannot be applied in every sector. In some sectors, there could be barriers to such an option in the form of particular economic strategies, employee issues and so on. In KOLTRAM's case, however, the auction was a success, so why not try this method more often?

Dariusz Tokarczuk will be a panelist at the "Polish chemical market privatization session" during the Investment Forum in Tarnów on 9 Sept 2009.
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