September 29 (SeeNews) - Croatian electrical equipment manufacturer Koncar Elektroindustrija [ZSE:KOEI] said on Wednesday that the country's competition authority AZTN has allowed an intended concentration resulting from indirect control of local power transmission equipment manufacturer Dalekovod [ZSE:DLKV] being jointly acquired by Koncar and Maltese company Construction Line Limited.
On September 28, AZTN assessed it was reasonable to conclude that the relevant concentration is not prohibited under the Competition Act and consequently, the notified concentration is considered permissible, Koncar said in a filing to the Zagreb bourse.
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On June 30, the shareholders of Dalekovod approved a proposal for the company's financial restructuring made by Koncar and Construction Line Ltd.
The proposal envisaged cutting Dalekovod's share capital to 2.5 million kuna ($388,000/333,000 euro) from 247.2 million kuna to cover earlier losses, only to further increase it to up to 412.5 million kuna in order to raise funding to cover the company's debt to creditors under a pre-bankruptcy settlement agreement concluded in January 2014.
As a result of the initial capital cut approved by the Dalekovod's shareholders on June 30, the company made a reverse stock split in July by consolidating every 100 shares into 1, and later the same month offered to potential investors new ordinary shares at their face value of 10 kuna each.
In late July Koncar said its unit Napredna Energetska Rjesenja will contribute 310 million kuna in cash to Dalekovod's capital increase. Founders of Zagreb-based Napredna Energetska Rjesenja are Construction Line and Koncar's fully-owned subsidiary Koncar Ulaganja.
Back then, Dalekovod said separately that demand for shares from the new issue exceeded the maximum amount planned in the first and second round of subscription.
However, according to some market participants, as a result the reverse stock split and the following capital hike, some current investors' stakes in the company would be reduced to a low single digit percentage, which does not resonate well with these investors.
Last month Dalekovod said its minority shareholders initiated two separate lawsuits, both challenging all of the decisions taken at the company's annual shareholders' meeting on June 30.
Croatia's financial services supervisory agency Hanfa said earlier this month that it decided to launch an infringement procedure against Dalekovod over a failure to disclose inside information related to its restructuring.
Dalekovod's shares surged to 85 kuna intraday on Wednesday on the Zagreb bourse, up 7.59% compared to the last closing price.
Koncar's shares traded 0.69% lower at 720 kuna intraday on Wednesday.
(1 euro=7.496 Croatian kuna)