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Serbia, Elektroprivreda energy company transformation: in the eyes of the stock market analyst

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Stock market analyst Branislav Jorgić said today that he is not clear about the motive behind the transformation of Elektroprivreda Srbije (EPS) from a public company into a non-public, single-member closed joint stock company, and that it cannot be the introduction of professional management.

He said that even In the previous form of organization of that company, professional management could have been introduced.

“The explanation was given that the transformation opens up the possibility of introducing professional management. The one who managed EPS could have introduced professional management in the previous form of organization, so the motives for the transformation are not clear to me,” said Jorgić.

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EPS is a closed joint-stock company since yesterday, a total of 36.5 million shares were issued, with a nominal value of RSD 10,000 per share, and they are 100 percent owned by the state.

Jorgić said that he cannot say with certainty whether the goal of such a transformation is the privatization of EPS, but that he can only guess, but he assessed that, if a partner were to be introduced into the current EPS as a non-public joint stock company, through recapitalization, it was a private procedure.

“I don’t know what the motives are for the transformation, the only correct way would be for EPS to be converted into an open joint-stock company, whose shares are listed on the stock exchange and are sold in a marketable, public way and new owners are introduced,” Jorgić said.

The meaning of determining the value of shares, according to him, is that it may or may not have a nominal value and it is irrelevant and not a benchmark if shares are sold on the stock exchange.

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According to him, a significant change in the management system of EPS could be made by the transformation from a public company to an open joint-stock company and the shares are listed on the stock exchange, and the state sells a part of those shares to citizens and mobilizes domestic savings and fills the budget.

By selling part of the shares, as he said, the ownership structure would also change on the stock market, and in that way the management system would also be changed, so aside from representatives of the state, representatives of domestic shareholders, banks, citizens, investment and pension funds, insurance companies, would participate in management.

“I think it would increase the efficiency of management,” said Jorgić and cited the example of Deutsche Telekom, which was 100 percent owned by the state, which made a decision on privatization, selling ten percent of shares and issuing new shares. By selling its shares, the state, as he stated, filled the budget, and on the other hand, funds from the newly issued shares flowed into the budget of Telekom.

He added that this could also be applied to EPS, which would issue shares and collect new capital for development instead of borrowing.

As he said, a closed joint-stock company is a non-public company and if a new investor were to be introduced, it would mean that it would not be through the stock market and would be considered a recapitalization in a non-public way.

According to Jorgić, the only real step forward in terms of capital strengthening and improvement of the management system is to change the ownership structure through an open joint-stock company, by listing shares on the stock exchange, and in that case EPS would have the obligation of public reporting, all information would be public, shares available to domestic investors, without the need for the state to mobilize funds to recapitalize EPS.

The management, as he said, should be made up of people who are experienced in managing EPS, not party cadres. When asked if he thinks that the current acting director Miroslav Tomašević to be replaced, Jorgić said that he does not know, but if the question is whether he could be part of the professional management, he thinks that he could because in the period since he has been leading EPS, he has achieved positive results and knows the way the company functions.

“Tomašević just needs to add more professionals from that field,” Jorgić said.

When asked when employees of EPS- can receive shares, Jorgić said that it is not legally stipulated.

Telekom Serbia is also a non-public company, and its shareholders once received their shares without compensation, but they cannot legally and formally sell them because they are not listed on the stock exchange. EPS workers could receive shares by decision of the state, that is, the government, but not there are deadlines,” Jorgić said.

He said that It is legal for the EPS Assembly to be made up of one member in the new form of organization, “but the question is what was achieved by the transformation from a public to a non-public joint-stock company”.

After the transformation, as he said, the state did not exclude itself from the management of EPS because the Supervisory Board will also consult it and the state will have the possibility to intervene in decision-making, for important decisions for sure, and will leave the operational ones to the management.


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