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November 7, 1994
. Vreme News Digest Agency No 163

The Sale of "Elan"

by Svetlana Vasovic Mekina

The report that "Komel" (majority shareholder in "Elan") sold its stock to the Elite America Corporation (EAC) surprised the Slovenian public. Just days later, another report stating that the EAC's owner was Frank Kadriu, an ethnic Albanian from Macedonia who now lives in the U.S., stirred up a new wave of suspicion.

Slovenian observers voiced the greatest concern over the fact that "Elan" was bought at a very high price. The Croatian owners ("Komel"), who managed to buy "Elan" for 32.5 million DEM two years ago, now received 70 million DEM for 70% of the ski manufacturer. The public, nervous after quarrels with their Croat and Italian neighbors, were told that Croatian President Franjo Tudjman had approved the sale which would benefit the "Privredna Banka" in Zagreb most of all.

The ratings of "Elan" started falling five years ago after the success of World Cup winner Ingemar Stenmark and the Yugoslav ski team (Krizaj, Strel and others), who were the best possible advertisement for the ski manufacturer. Just before the breakup of Yugoslavia, the daily press reported that the "Medjimurska Banka" was having problems getting payments on a loan to "Elan". General manager Uros Aljancic and financial director Pavle Kodor soon saw their empire crumble and fall. The media reported irregularities ranging from bad debts and loans to other financial fraud. The "Les" bank closed down because "Elan" left thousands without their savings and the state refused to offer guarantees.

Finally, "Elan" was put into receivership and the company was auctioned off. Much to the surprise of Slovenian buyers and banks, the auction was attended by well-prepared Croatian debtors who bought "Elan". There were a few attempts to prevent the company from being bought by the Croatians, but the courts ruled against them. Only a week ago it became clear that "Elan" is an open sore in Slovenia when Parliament appointed new judges. Judge Anton Subic, the man who ruled in favor of selling "Elan" to the Croatians, almost lost his job because former Deputy Prime Minister Leo Seserko thought the judge had made several mistakes.

After the sale of the "Elan" corporation (including the most important company, "Elan SKI", and six others) general manager Koscec achieved good business results.

Paradoxically, the popularity of "Elan" skis fell in the least expected place, among the company's best buyers. Slovenians turned to other world class brands and refused to ride Croatian skis.

National emotions are easily stirred up and that has been proved by the second sale of the ski manufacturer. The Slovenian Popular Party's parliamentary deputies claimed that there had been irregularities in the deal and asked Parliament to form a commission to investigate the abuse of power by some politicians, launch an investigation into the "Elan" sale and order the public prosecutor to issue warrants for the arrest of everyone involved, all in the name of higher national interests faced with "a deluge of Albanian capital". That party's suspicions were supported by the Slovenian state media.

Slovenian TV reported that the San Diego Chamber of Commerce wasn't aware of the ECA, which means that the company only owns a mailbox in that city. The witch-hunt after the buyer was backed up by pictures of Frank Kadriu on a poster advertising the rental of western cars in Albania. This allegedly can't be a good introduction to buying a serious sports equipment manufacturer. The hunt became even more fierce because of foreign policy considerations. Under pressure from Italy, Prime Minister Drnovsek's government promised to change the constitution and allow all European Union citizens to buy property in Slovenia. That promise immediately raised fears that foreigners would buy up everything, including elite areas on the Adriatic coast and in the Alps, because of the huge supply and low purchasing power of the local population. So the report of the "Elan" sale ("to an Albanian!") just added salt to the wound.

EAC spokesmen haven't taken the Slovenian media too seriously. Kadriu allegedly already owns property in Slovenia and is planning to build an amusement park in Ljubljana. Enrico Tonizzo, head of the EAC office in Udine (Italy), told reporters that Miha Kozinc (until recently Slovenia's justice minister) was involved in the deal, which means that an expert lawyer was involved.

Despite negative reactions, "Elan" will become the property of the EAC in about 15 days, when the company pays up.

But the EAC did try to lower the tension and issued a statement saying that "Elan" would remain a Slovenian company. That means that the company will be headed by Slovenians.

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