Monthly Archives: January 2013

Vitek also making Ablon gains

We missed this little piece of news from the beginning of the week. It seems Mr Vitek is making quite the property play this year. Along with a suspected fight for control of Orco, the Czech billionaire increased his holding in the developer Ablon near the beginning of the month to 15.52%, before taking an even bigger slice:

ABLON Group Limited (“ABLON” or the “Company”), a leading real estate owner and developer in Central Europe, was informed today that Mr. Radovan Vítek, a Czeck national private person, owner of CPI Group, has increased his total holding in ABLON from 21,250,954 or 15.52% of the issued share capital, to 30,443,938 shares, equalling 22.23% of the issued shares and voting rights in the Company.

Ablon is holding an extraordinary general meeting on February 1st.


The fight for Orco

OrcoVaci1Game on! That, at least, is the word from Bloomberg, which reports that Orco Property Group founder JF Ott is buying shares in the company. (Not a secret, by the way, since it’s also confirmed on Orco’s website here) The reason, it’s speculated, is that he’s fighting with the Czech business mogul Radovan Vitek for control of the company.

Orco has gained 76 percent in the past three months after a bond-for-equity swap cut indebtedness and sent the stock price to a record low on Sept. 12, attracting new investors. Vitek, owner of Czech Property Investments AS, who bought a 30 percent stake, has proposed to become board member and cut the company’s share capital by 51 percent without cancellation of shares at a Feb. 4 shareholder meeting. Ott bought 8.4 percent last week, raising his stake to 8.9 percent, Orco said yesterday.
“We see CEO Ott’s increased stake as part of a fight for control over Orco,” analyst Josef Novotny at Erste Group Bank AG’s Prague-based unit wrote in a report to clients today.

The super-coin debate

010813krugman1-blog480Those who watched the high-stakes drama over the holidays in which the U.S. got as close to the fiscal cliff as it could may have been reminded of an unruly 4-year old boy who insists on peering over the side of a precipice. Possibly just for the fun of annoying his parents, and proving that he can. The fact that lawmakers in Washington actually came to an agreement was greeted with immediate relief and rising markets, but there was never any doubt that more drama was on the way.

And it’s coming quick. In order to pay its bills, the U.S. Congress will have to raise its debt ceiling, once again, and angry Republicans are certain to make life difficult for President Obama to come to grips with spending. Not an unreasonable goal, in fact.

But if you were in any illusion over just how tough that fight could end up being, the trillion dollar coin should be enough to bring you back down to Earth. Apparently, because of a bunch of weird, arcane rules, while the Congress holds the country’s budgetary purse strings the President actually has the power to mint a coin whose value could literally be $1 trillion. So, theoretically, if Congress refuses to agree to a deal on raising the country’s debt limit, Obama could simply create $1 trillion out of thin air, deposit it in the Treasury, and pay the country’s bills.

For normal people, or possibly for about 99.9% of the planet, this seems crazy. It’s like a Black American Express card on steroids for superpowers, and something about it just feels absolutely wrong. How bizarre, then,  to read Nobel prize winners taking the idea seriously, and the Financial Times writers discussing how the possibility of such a coin alters the negotiations dynamic between Congress and the President. So get used to hearing about this (hopefully) fictional coin. And/or follow the “debate” on Twitter at #MintTheCoin .