The FINANCIAL — From 24 February Elit Electronics has been under new management. “The main objective of which is to correct the mistakes of the old management by the effective anti-crisis programme to renew the company’s financial statement”, company shareholder TBC Bank said.
According to TBC Bank, the decision to change the Director of the company was governed by the wish of the stockholders; due to the fact that the old management could not manage the company effectively and had made several wrong decisions, which led to huge amounts of liabilities to banks (Bank of Georgia, TBC Bank and Bank Republic).
On January 14 Kokoladze told Sarke news agency that he will cover account payable gradually by 2016. He did not name the sum to be paid in 2010, saying that it will become known in February.
The change of director was guided by a 3 month transitional period, when creditor banks decided to help the company that was in the heaviest financial condition from going bankrupt and to eliminate the gaps present in the company’s management.
Bank said Kokoladze was evidently not interested in cooperation.
“Anzor Kokoladze, who by that time possessed 15% of stocks, received offers from creditor banks to move to position of Chairman of the Supervisory Board from the position of Director and be given 25% of shares in his possession. Moreover he was given the offer, in case of covering all liabilities to banks, to atone 100% of the company from credit banks. However, Kokoladze refused the offer many times”, TBC Bank said.
Consequently the banks that possess 85% of stocks, by joint decision decided to change Kokoladze for a new highly-qualified management team to better fulfil the rehabilitation plans set by credit banks and moreover, for better company development.
According to Invest in Georgia Anzor Kokoladze was the single owner of the total stocks. He was up till recently managing a 150 million budget annually. But the conflict with the tax department has changed his life, business and future plans dramatically.
On September 1, Tax Department closed 34 of Elit Electronics stores.
According to former director Anzor Kokoladze the company’s accounts were frozen on August 10. He said the company owes the government GEL 120,000 (about USD 71,000) due to an accounting error. Elit Electronics employs over 1,000 people directly; and the company estimates that an additional 900 people are affected indirectly.
Elit Electronics, founded as LLC in 1996, was reorganized in JSC 2 years before. Admission of shares in the trading system Georgian Stock Exchange was expected in September 2008, but after the war with Russia, the company changed its plans.
During the war with Russiaa Elit Electronics store in Tamarasheni and Gori were destroyed. Total losses reached GEL 1.8 million the company told The FINANCIAL in September 2008.
The Navtlugi Railway Station Rehabilitation project planned by Elit Electronics is now suspended. The company won a competition for a 49-year leasing of Tbilisi Junction building. Elit Electronics was offered a leasing fee to the amount of USD 22,000 monthly. The company was planning to invest USD 15 million.
Political disagreement, budget deficit and expected entrance of a new competitor to the local market were named by different experts as the main reasons causing the collapse of Elit Electronics, the largest Georgian consumer electronics importer.
Eter Kokoladze, Head of the Sales Department of Elit Electronics told The FINANCIAL that “During the war with Russia there was serious decrease in sales and trade. In such a critical situation as this it’s very important and necessary for businesses to take out banking credits, which help the business stay afloat.”
The company became a borrower and responsible for a USD 15 million credit line from different banks. Lately, banks claimed their partnership in management of the company. But this decision was not welcomed by borrowers. Ia Gogoladze, Advertising Manager of Elit Electronics, told the FINANCIAL “it was a surprise, and the Bank’s decision was unexpected.”
“The increase in sales over the last 3 months is due to additional investments from the banks and moreover, transferring of the best employees to Elit Electronics. However, there would have been better outcomes if the company director had compromised his ambitions in the first place and acted in the sincere interests of the company”, said TBC Bank.
“As for the company’s employees, the new management will not fire them. For those who wish to continue working at Elit Electronics, the new management is offering them a guaranteed workplace and financial stability.
“Despite the disinformation of the old management and change of director, the company is continuing to function. At present 90% of Elit Electronics stores are operating as usual. Moreover, from now on the whole chain of Elit Electronics will operate at full capacity”, TBC Bank said.