STOCKWATCH - Raiffeisen Recommends "Reduce" for Croatia's Podravka Stock

“We expect further dubious past transactions to be discovered in the wake of a police investigation and media hype and change our recommendation from “hold” to “reduce” until the case is completely cleared,” RCB said in a statement.

According to an investigation and newspapers articles, the scandal in Podravka started with Split based SMS’s default on Podravka’s loan continued with the revelation of a secret Management Buy Out (MBO) plan since 2006, RCB added.

“Currently, there are rumors that some changes in the Board and Supervisory Board might be expected. However, the scandals and changes of top positions will stop the cost-cutting process and slow down the development of the company, in our view,” the statement said.

Podravka shares closed 3.14% down at 276.0 kuna ($55.3/37.9 euro) on the Zagreb Stock Exchange on Thursday.

(1 euro = 7.2735 Croatian kuna)