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The Warsaw Voice » Special Sections » September 2, 2011
Privatisation in Poland: Investor’s Guide
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Privatisation Keeping Up The Pace
September 2, 2011   
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The more private ownership in the economy, the faster a country’s economic growth and the better people’s standard of living. That is why it is so important to methodically privatise assets still owned by the state. In Poland, privatisation projects completed since the beginning of the current government’s term in office have generated PLN 42.18 billion.

This year, 247 privatisation projects have been carried out, 85 of which have been successfully completed (34.41 percent of projects) for 81 companies in which the State Treasury holds shares (data as of July 31, 2011). This means the Treasury Ministry has already acquired more than 70 percent of the income from privatisation planned for this year (PLN 11.2 billion out of a planned PLN 15 billion).

The great majority of privatisation projects carried out in 2011 involve ownership changes in small and medium-sized enterprises. Compared to the same period last year, the number of completed non-stock exchange privatisation projects has grown by more than 10 percent. At the same time the value of revenue from non-stock exchange privatisation in 2011 is PLN 1.22 billion higher than in the same period of 2010, an increase of more than 145 percent.

Next year’s planned revenue from privatisation is estimated at PLN 10 billion. Whether this level is actually achieved will largely depend on the business cycle in Poland and across the world as well as the economic/financial condition of the companies slated for privatisation.

Privatisations in Poland in 2011 are being carried out under the Privatisation Plan for 2008-2011 approved by the Council of Ministers (the government) in April 2008. Additionally, separate development strategies have been prepared for individual industries of strategic importance, including a development program for the power sector, a strategy for the oil and fuel sector, and a privatisation strategy for the chemical and hard coal mining industries. The Privatisation Plan for 2008-2011 covers assumptions contained in strategies adopted by the Polish government for individual industrial branches. The adopted strategies are constantly modified depending on the market and economic development within the industry, the financial standing of companies operating in that industry and when it is not possible to carry out privatisation by means of methods proposed in the strategy.

As set down in the Directions of State Treasury Asset privatisation in 2012, privatisation will be conducted chiefly in the financial, power, petrochemical, chemical and farm and food industries, but also in other sectors (such as transport, metallurgy, tourism).

Initial work on a draft of the privatisation Plan for 2012-2014 is underway.

Companies from the chemical sector slated for privatisation by the Ministry of the Treasury:
Zakłady Azotowe Puławy S.A. is one of the biggest chemical companies in Poland. It has been a public company listed on the Warsaw Stock Exchange since 2005. For more than 40 years, ZA Puławy has been a leader in Poland’s fertilizer and chemical industry. Initially the company focused on making nitrogenous fertilizers for agriculture, but in the course of its development it systematically increased the output of chemicals. Sales of chemicals currently account for about 40 percent of overall output. One of the company’s priority development directions was to add new melamine production lines. ZA Puławy exports its products to more than 50 countries around the world, from Peru all the way to Thailand. ZA Puławy’s location in Central Europe enables the company to build a presence both on the demanding EU market and in the rapidly developing eastern markets. The company’s products also have a solid presence on American markets. The State Treasury controls 50.67 percent of the company’s shares.

Kopalnie i Zakłady Chemiczne Siarki Siarkopol S.A. is a sulfur mining and processing company that extracts sulfur using the underground melting method. The company’s Osiek Sulfur Mine is the world’s only operational mine where sulfur deposits are extracted in this way. The annual output is 800,000 metric tons of sulfur. The company has a license for mining sulfur deposits and extracts sulfur with very good parameters. The technology applied at the mine is not only innovative but aimed at respecting and protecting the natural environment. Siarkopol offers sulfur in liquid, granulated, ground and flaked form.

The company also has chemical processing operations. Its products are targeted mainly at companies from the chemical sector, producers of fertilizers, pesticides, viscose fibers, cellulose, tires and rubber goods. Its biggest clients include Maroc Phosphore S.A. in Morocco, Lenzing AG, Ciech S.A., Michelin, Bridgestone, Zakłady Chemiczne Police S.A., Zakłady Azotowe w Tarnowie-Mościcach S.A. and Zakłady Azotowe Puławy S.A.

The State Treasury owns 100 percent of the company’s shares.

Ciech S.A. is a leader in the Polish chemical sector. It is involved in chemical production, trade and distribution. The company also runs its own consignment warehouses and storage facilities. Ciech’s operations are largely based on the export of chemical products. Export levels and profitability depend on the market situation in Europe and around the world. An equally important factor is the development of Poland’s production sectors that are the company’s main domestic buyers, in particular the chemical, plastics and glass industries and agriculture. In its operations Ciech concentrates mainly on Central and Eastern European markets. It focuses on national and regional market segments that are less sensitive to business cycle fluctuations. Ciech has been listed on the Warsaw Stock Exchange since 2005. The State Treasury owns 36.68 percent of shares in the company.

Zakłady Azotowe w Tarnowie-Mościcach S.A., commonly referred to as Azoty Tarnów, is one of the biggest companies in the Polish chemical sector. Its core business is the production and sale of engineering plastics, components for their production, mineral fertilizers and chemicals. The company is also a major producer of fertilizers, and is a leader in the production of fertilizers with high sulfur content. Exports, mainly to European Union countries, account for almost 70 percent of sales. This is the only chemical company in Poland to use local sources of natural gas, the main raw material for the chemical sector’s companies. In 2010 Azoty Tarnów took over 100 percent of shares of a German polyamide producer in Guben. The most important event of 2010 was the takeover of a controlling stake in one of the biggest companies from the “Great Chemical Synthesis” (bulk chemicals) sector in Poland - ZAK S.A. (formerly Zakłady Azotowe w Kędzierzynie).

On June 15 Zakłady Azotowe w Tarnowie-Mościcach S.A. announced a subscription for the sale of shares in Zakłady Chemiczne Police S.A.. The subscription ended on Aug. 16 and the transaction on the WSE took place on Aug. 19, 2011. ZA Tarnów purchased shares in ZCh Police accounting for 66 percent of votes at the General Assembly. Taking over ZCh Police is part of the Azoty Tarnów Group’s strategy and will enable the group to increase its production capacity for mineral fertilizers, develop the distribution network and optimize the cost structure, including in raw materials supplies (such as natural gas). Incorporating ZCh Police into the Azoty Tarnów Group’s structures will lead to the formation of a chemical group that will be the biggest in Poland and a major player in Europe, able to compete effectively with world leaders in the fertilizer sector. The State Treasury owns 32.05 percent of shares in the company.

Companies from the farm and food sector:
Przedsiębiorstwo Rolne RUSKO Sp. z o.o. agricultural company is involved in grain crops and growing rapeseed and sugar beets, mainly on land leased from the Agricultural Property Agency. Its other activity includes milk production and raising beef cattle. The company (and the arable land where it grows cereals) is located in Jarocin and Krotoszyn counties in Wielkopolska province. It includes three agricultural facilities, in Rusko, Wronów and Stefanów, and a mechanization and transport base in Rusko. The company’s products are sold only to domestic clients. The State Treasury holds 100 percent of shares in the company.

Włocławskie Przedsiębiorstwo Obrotu Zwierzętami Hodowlanymi w Wagańcu Sp. z o.o. is a company from Kujawy-Pomerania province that operates mainly as a middleman in trading of animals. It buys livestock for slaughter and further processing. WPOZH has a strong and established position, mainly the result of its long years of experience. Another area of activity is the preparation and distribution of firewood. Slaughter animals are sold to meat processing plants with which WPOZH has signed delivery contracts. The State Treasury holds 100 percent of shares in the company.

Centralny Ośrodek Chłodnictwa COCH w Krakowie Sp. z o.o. (COCH in Cracow) is active mainly in research and development involving refrigeration, air conditioning and heat pumps, designing cooling equipment and systems of many different types. The company’s main clients are production companies from the refrigeration, air conditioning and heat pump sectors (manufacturers of refrigerating compressors and units, heat exchangers, refrigerated stands and similar equipment, tunnel freezers and freezer rooms, heat pumps, refrigeration fittings), companies that use refrigeration systems, companies offering maintenance and repairs of refrigeration and air conditioning equipment. The State Treasury holds 100 percent of shares in the company.

Przedsiębiorstwo Nasiennictwa Ogrodniczego i Szkółkarstwa w Ożarowie Mazowieckim S.A. is one of Poland’s largest seed production companies. It offers a wide range of vegetable and flower seeds, flower bulbs, perennials and nursery material, both decorative and fruit plants. The company also sells horticultural tools and equipment, pesticides and other gardening items as well as farming machinery. PNOiS has six garden centers in different regions across Poland (Ożarów Mazowiecki, Warsaw, Katowice, Poznań, Lublin and Rzeszów), three branches (Lublin, Poznań and Rzeszów) and a seed production facility (farm) in Iłówiec. The company focuses mainly on the amateur seed market; this segment accounts for about 30 percent of sales. PNOiS sells its goods domestically and on foreign markets (including Belarus, Latvia, Lithuania, Russia and Ukraine). The State Treasury holds 100 percent of shares in the company.

Szczecińskie Zakłady Zbożowo-Młynarskie PZZ S.A. has been restructuring its assets, finances and organization over the past few years. As a result, it has withdrawn from milling operations and from retail liquid-fuel sales. Today its core business area is handling of grain and small farm products in the port of Szczecin, based on the company’s own silos. The company, wholly owned by the State, also owns the Kluczewo Mill in Stargard Szczeciński which is currently being leased.

Centrala Nasienna w Warszawie Sp. z o.o. is a seed company that has been operating for more than 50 years. Its core business is the production and sale of seeds of cereals, papilionaceous plants, grasses, seed potatoes and other agricultural seeds. It works with the biggest companies across the country and with foreign partners as well. In recent years the company began preparing seeds and grass mixtures in small-volume packaging. It also handles trade in food grain and animal-feed grain. The company signs agricultural procurement contracts in Mazovia and Lublin provinces. The company, wholly owned by the State Treasury, continues to expand its wholesale and retail sales network.

Chłodnia Białystok S.A. is one of the biggest producers of frozen vegetables, fruit and culinary products in Poland. The company operates mainly in Podlasie and Lublin provinces. Its development strategy includes developing a range of niche and innovative products, expanding the offered range of products, opening new distribution channels, increasing sales to existing clients, expanding export sales and improving the sales process. The State Treasury owns 49.15 percent of shares in the company.

Transport companies slated for privatisation include:
Przedsiębiorstwo Komunikacji Samochodowej is the generic name of 11 of these Road Transport Enterprises that the State Treasury plans to privatise. Their core business is transporting passengers in a regular bus service. They also provide services in coach rental, auto diagnostic testing and repairs. They provide tire services, sell spare parts, offer tachograph maintenance and repairs, road assistance services and sell fuel. The companies often work with local governments in the transport of schoolchildren and employees. They focus on the development of transport services mainly by signing successive contracts for school and employee transport, launching new routes, finding new markets as well as cooperating with travel agents, parishes and institutions. The companies also plan to develop their own chain of gas stations.

Companies from the metal industry:
Fabryka Przewodów Energetycznych S.A. (FPE) from Będzin (Silesia province) is active in the cable sector and in part in non-ferrous metallurgy. It manufactures bare aluminum, steel and aluminum, and steel and aluminum segmental power conductors. FPE estimates its share in the domestic sales market at about 2 percent. Raw materials are supplied by domestic producers of non-ferrous metals and foreign ones from the European Union. The company’s products are sold to the power engineering sector, railways, municipal transportation companies, the automotive industry and electrical engineering companies. At present exports account for about 30-40 percent of sales. The company has announced plans for expansion in European markets. The State Treasury owns 100 percent of shares in the company.

Other companies from the metal industry also included in the privatisation plans:
Defka Sp. z o.o. from Dzierżoniów in Lower Silesia province makes iron castings, water pipeline fittings, steel and non-ferrous metal elements. The State Treasury has 34.23 percent of shares in this company.

Kolejowe Zakłady Nawierzchniowe Cogifer Polska Sp. z o.o. from Bydgoszcz (Kujawy-Pomerania province) manufactures high-speed turnouts, track equipment and sub-assemblies for trains and trams. The State Treasury has 47.62 percent of shares in this company.

Opakomet S.A. from Cracow has an over 70-year tradition in the metal and packaging business. Its products include cans and various kinds of plastic packaging for the food processing industry (bottles), the automotive industry and the chemical industry (canisters). The State Treasury holds 49.44 percent of shares in the company.

Fabryka Elementów Złącznych S.A. from Siemianowice Śląskie (Silesia province) manufactures bolts, nuts, railway fasteners and mining support elements. It is wholly owned by the State Treasury.

Privatisation is also planned for companies in the defence industry:
Warszawskie Zakłady Mechaniczne PZL-WZM
w Warszawie S.A.
is a manufacturer of parts for Diesel engine injection equipment. PZL-WZM’s range includes six main product groups: nozzles, pumping elements, injection pumps, injectors, pumping elements and nozzles for injection units, used mainly in engines in the United States. In terms of value and volume, the greatest share in the company’s range and sales goes to pintle and group-hole nozzles. PZL-WZM has an extensive machine park and laboratory facilities with unique equipment for measuring details with an accuracy of below one micron. The laboratory has precision measuring and diagnostic equipment for measuring flow in injection systems. Many technological processes are computer-controlled.

About 60 percent of the company’s products are exported, the rest is sold domestically. The main regular foreign buyers include Melex-FIS (United States - 25-40 percent of exports), Delphi (Britain), Stanadyne (Italy), and Maximiliano (Argentina). The company has regular clients in many countries of Western Europe, the CIS, the Middle East, South America and Australia. A group of 21 dealers all over the country handles distribution of the company’s products.

PZL-WZM’s strategic principles include implementing sale of state-of-the-art technical details, technical diversification of products sold, launching new products - especially for Common Rail systems (direct fuel injection systems) and seeking opportunities for new long-term contracts (not just in the injection equipment sector). In 2013 the company, which is wholly owned by the State Treasury, plans to move its production to a new location.

The State Treasury owns 100 percent of shares in the company.

Other companies for sale include businesses from the defence industry:
Unimor Radiocom Sp. z o.o. from Gdańsk (Pomerania province) is one of the leading companies in the professional electronics branch. It produces and services military equipment (VHF/UHF transceivers for aircraft, base stations for ground and naval craft, ATC Mobile Aerodrome Radio Beacon, VHF/UHF communication receivers), and airstrip transceivers. The State Treasury owns 51.64 of shares in the company.

Wojskowe Biuro Studiów Projektów Budowlanych i Lotniskowych Sp. z o.o. is an architectural design company based in Warsaw. The State Treasury owns 100 percent of shares.

A service company is also being put up for sale:
Budopol-Delta Sp. z o.o. based in Nowiny (Świętokrzyskie province) is a real estate management company for land that it holds in 99-year perpetual usufruct from the State Treasury (a total of 15.3049 hectares with settled legal status). Its core operations involve management, utilization and leasing of this real estate, power distribution and services in water supply and sewage removal.

Budopol-Delta is based in Sitkówka-Nowiny commune near Kielce, on the Warsaw-Cracow route. This attractive location, coupled with the development of small business in the area, enables the company to conduct successful operations. The companies leasing real estate from the company are mainly from the construction sector. The currently implemented strategy assumes systematic modernization of facilities to increase the attractiveness of leased buildings and yards and consequently revenue from lease contracts. The State Treasury owns 83.42 percent of shares in the company.

Four other service companies slated for privatisation:
Agpol S.A. in Warsaw handles real estate lease and management, involving its own or leased real estate. The State Treasury holds 49.15 percent of shares in the company.

Przedsiębiorstwo Usług Wodociągowych HKW Sp. z o.o. from Dąbrowa Górnicza in Silesia province is a supplier of high-quality drinking and industrial water. The State Treasury owns 39.46 percent of the shares.

Wrocławskie Centrum Prasowe Sp. z o.o.’s core business is real estate lease and management, involving the company’s own or leased real estate. The company has three pieces of land in Wrocław. It is wholly owned by the State Treasury.

Białostockie Przedsiębiorstwo Robót Zmechanizowanych
i Maszyn Budowlanych Sp. z o.o.
in Białystok leases construction machinery and equipment. The State Treasury owns 100 percent of the shares.

Companies available in the non-ferrous metallurgy sector:
Zakłady Górniczo-Hutnicze Bolesław S.A. in Bukowno, Małopolska province, is Poland’s biggest producer and supplier of electrolytic zinc. Annually the company produces about 75,000 metric tons of top-quality electrolytic zinc, from which it makes about 19,000 tons of zinc alloys for galvanization. About 16 percent of the output is exported to Slovakia, Hungary, Austria, the Czech Republic, Germany, Belgium, France and Serbia. The company enjoys a dominating position on the domestic market, with a 60-percent share. The company plans to extend the mining operations of the Olkusz-Pomorzany Mine until 2016 and increase metallurgical production to 100,000 tons per year, and also to diversify production by launching the production of zinc white, increasing the output of alloys and finished goods. The State Treasury owns 100 percent of shares in the company.

Investors can also buy a company from the machine-building industry:
Śląskie Zakłady Armatury Przemysłowej ARMAK Sp. z o.o. from Sosnowiec specializes in manufacturing safety valves, solenoid valves, liquid indicators, stop valves and heavy fittings. The products, available in a wide range of materials (cast iron, cast steel, acid resistant and stainless steel, brass and aluminum), are made using technological processes that ensure the highest quality and reliability. They are used in the following sectors: power engineering, heat generation, petrochemicals, food processing, metallurgy and coking, mining, the gas industry, shipbuilding and railways.

The company sells its products at home and abroad. Its goods are sent to European Union markets (Germany, France, Austria, Lithuania, Czech Republic, Hungary, Romania) and to Eastern Europe (Russia, Ukraine). The State Treasury owns 100 percent of shares in the company.

Center for Investor Relations (CRI)
Prospective investors interested in taking part in the privatisation of companies with State Treasury involvement may directly contact the Center for Investor Relations (CRI) at the Ministry of the Treasury.

The CRI’s staff gather information on companies undergoing privatisation, provide information on privatisation procedures and help interested investors contact the appropriate persons responsible for a given privatisation at the ministry.

e-mail: investor@msp.gov.pl
Tel.: (+48) 22 695 90 01/02
Fax: (+48) 22 629 98 38
The CRI’s address: ul. Krucza 36/Wspólna 6, 00-522 Warszawa
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