0

Times are not good for Prevent Global, which has amassed EUR 60m of debt. The company has been plagued by ownership feuds, CEO resignations, threats of production relocation, and employee revolts.

Proxy battles

Major problems arose between Prevent Global and Prevent Dev, the latter being the second largest owner of the former and (simultaneously) its main customer, supplying Prevent Global's car seat covers to German carmakers.

Prevent Dev's boss and owner Nijaz Hastor felt that his interests were not being adequately considered by the (now former) CEO of Prevent Global, Igor Majcen. The latter, Hastor complained, was more concerned with pleasing the biggest owner, Janko Zakeršnik.

The disagreement grew to such an extent that all cooperation between the two entities was suspended, causing the 1,800 employees of Prevent Global to fear for their jobs. Fear turned into action, and the employees staged a strike, which eventually forced Majcen to resign, making way for Renato Krajnc.

Strike your luck

Majcen's departure came after more than 1,000 workers went on strike at the Prevent Global plant, as well as two other subsidiary companies. The strike started after Majcen had failed to announce to employees that Prevent Dev was terminating its cooperation with Prevent Global.

When it became clear that the company failed to pay November's salaries and that Prevent Dev sent trucks to the company's head quarters in Slovenj Gradec to retrieve raw materials as a part of the scheme to relocate production, the disagreement escalated further.

The workers went on strike, holding Majcen a prisoner of his own office, while demanding that he leave his post immediately. The disgraced CEO was trapped until police intervened and still then claimed, "The street will not tell the management to resign." Two days later, he did just that.

Crack in the foundation

With employees returning back to work, a rift still remains open between the two largest owners of Prevent Global, Janko Zakeršnik (owning 52% of the shares) and Nijaz Hastor (45% shareholder as well as owner of Prevent Dev). The two leading players in this corporate drama seem unable to agree on any mutual course of action.

Hastor refuses to invest new equity into the company battered by losses, fearing that it will not help the company and saying that savings measures should have been instituted by the previous management.

This standoff could result in insolvency, causing job losses: a devastating outlook for the already hard hit Koroška - the region with the highest unemployment rate in Slovenia.

Hard times

According to official statistics, the unemployment rate lingers at 9.5 percent. In Slovenj Gradec, the region's major city, the unemployment rate is 10.7 percent, while in the adjacent town of Ravne the figure is close to 12 percent. These are also the towns where Prevent Global is one of the biggest employers.

If Prevent Global files for insolvency, it could cause 1,800 workers to lose their jobs. Prevent Global's future, therefore, heavily depends on the business plan of Prevent Dev. If the German company decides to move production elsewhere, only an estimated 750 positions would be kept in Slovenia.

A slumping industry

Car companies will still be dependent on government bailouts for at least another year, while at the same time engaging in radical cost cutting. The demand for vehicles is likely to contract in 2010 as well. The Prevent group provides products to Volkswagen, Renault, BMW and PSA (Peugeot, Citroen); all of which marked a decrease in sales in 2009.