INTERVIEW – Bosnian Spa Operator Banja Vrucica Hopes To Raise 2.6 Mln Euro Through New Share Issue To Finance Investment

The company expects its total revenue to rise by almost 10% a year over the eight years following the renovation of Kardial, on which it plans to spend a total of 16 million marka. Banja Vrucica sees its net profit topping 2.7 million marka in 2018, two and a half times higher than in 2008, while operating revenue is expected to nearly double to 15.8 million over the same period.

The company has projected its 2009 net profit at 391,044 marka, sharply down from 1.02 million marka in 2008, due to the closure of the Kardial hotel for the overhaul, Ostojic said.

The spa complex was developed after World War I but its buildings were destroyed in the Nazi invasion of Yugoslavia in World War II. After 1945 Socialist Yugoslavia nationalized and rebuilt the spa complex, expanding the business and attracting more visitors each year. The upside drift was sharply interrupted by the 1992-1995 war in Bosnia and Herzegovina that left the country divided along ethnic lines into two main regions: a Serb Republic and a Muslim-Croat Federation.

The spa operator runs four hotels with a combined capacity of some 1,000 beds, including Kardial. Its spa, used for the treatment of cardio-vascular diseases, has turned the northern Bosnian town of Teslic into a major tourism destination. Visitors spent a total of 378,569 overnights in Banja Vrucica hotels from the beginning of 2006 until the end of 2008. Nearly 80% of the visitors, come from the Serb Republic, followed by guests from the Federation and from neighbouring Serbia and Montenegro.

Serb Republic-based Banja Vrucica is a privately-run spa complex, in which local Zepter Fond is the largest single shareholder with a 25% stake. The company provides accommodation and recreation services, as well as organization of congresses and seminars.

“We plan to reopen the Kardial hotel before the New Year,” Ostojic said, adding that the company has already secured 11 million marka – six million from its own funds and a further five million in a credit from the Serb Republic Investment-Development Bank - for the renovation.

“We expect the new share offering will meet its success target of 60% and the more, the better,” Ostojic said.

The company is offering 5.0 million new shares with a par value of 1.0 marka each to its shareholders with pre-emptive rights until the end of the week. What remains will be offered to new investors from August 23 until September 3.

Banja Vrucica's stock last traded on the Banja Luka bourse on August 5, when it fell 0.54% to 0.92 euro.

(1 euro=1.95583 marka)