DR SIMO INSTITUTE MILOSEVIĆ / PHOTO: Aleksandar Bogicevic

A collective of minority shareholders of the “Simo Milosevic” Institute in Igalo, united under the Montenegrin Association of Small Shareholders (Cama), is set to commence selling their stakes on the stock market today at a price of 100 euros each.

The state holds 56.4 percent of the shares in the Institute, while businessman Žarko Rakčević owns 27.4 percent through Villa Oliva. The remaining 16 percent belongs to small shareholders, who are now consolidating their interests through Cama. To achieve two-thirds ownership and thereby secure independent decision-making concerning restructuring, recapitalization, or asset management, the state is missing 10.2 percent of the shares.

During the General Assembly of Shareholders, further discussions regarding the current restructuring plan stagnated, prompting the government to accept proposals for Oliva’s requests, which will be modified in the plan pending the continuation of the session on January 21, according to reports from Mine.

Rakčević requested that the Institute’s first phase and the land complex surrounding Tito’s villa not be developed into residential apartments or business spaces, a request that has been endorsed by the government.

A conflict arose over a decision involving a recapitalization of 23.5 million euros, as the government altered its decision before reaching the session to secure a two-thirds majority, thus excluding minority shareholders from influencing the company’s future. Rakčević remarked that the state has shown itself to be an inadequate owner and opposed the two-thirds motion, further proposing to cover the Institute’s debts, which amount to 23 million euros.

Cama representatives indicated that should the state list its shares on the stock exchange, their members might obtain two-thirds ownership.

“With a favorable response, such a purchase could substantially enhance their stake, potentially achieving the necessary ten percent, thus allowing significant shareholders to maintain their ownership percentages through recapitalization. The price at which the state will acquire shares during the planned recapitalization is over 50 percent higher than our offered price, where the Institute’s total valuation is merely 38 million euros, significantly below its fair market value,” news from Cama reported.

They reminded stakeholders that minority shareholders have seen their shares increase in value over the past two decades, ranging from 150 to 300 euros, “which equates to as much as 500 euros in today’s market.”

“Ultimately, individual responsibility for losses rests with everyone, but objectively speaking, investment decisions were made based on misleading and erroneous statements from previous state representatives and regulatory bodies. We remain hopeful that bankruptcy can be avoided, a situation in which both the state and major shareholders would be liable. However, under such circumstances, the expected value of the bankruptcy estate would be around 250 euros,” Cama officials stated.

The shares of the Institute have a nominal value of 154.93 euros, which will apply in the recapitalization process, while the current market value is at 35.5 euros and is increasing steadily. The Institute’s shares are in a segment that can apply a maximum daily increase of ten percent, provided the stock exchange does not alter its regulations.

The existing restructuring plan outlines a total investment of 106 million euros in the Institute over a four-year period, which includes 64 million from asset sales, 28.2 million from the disposal of other Institute assets, and a loan of 14.5 million. The plan aims to enable the government to provide legal support to the state enterprise in compliance with strict EU state aid regulations, a prerequisite for initiating recapitalization.

The authors of the plan assert that without its approval, the Institute is bound for bankruptcy, having accumulated losses of 30 million euros, threatening its operation as a public utility.

Upon completion of the restructuring by 2029, according to the plan’s authors, the Institute’s projected profit would reach 4.9 million euros and continue to grow, reaching 6.6 million euros by 2034.