Tallinn nightclub in trouble

The Baltic Times, TALLINN
Aug 05, 1999
By Kairi Kurm

For three year’s one of Estonia’s biggest nightclubs, Dekoltee, has been selling discotheque tickets as theater ones, paying no value added tax. Now, as the tax department demands 6.5 million kroons ($436,000) VAT and a 3.5 million kroon fine for delay, Dekoltee may disappear from the Tallinn’s nightclub scene.

The tax department started bankruptcy proceedings against the owner of the nightclub, Noxtun, on June 22 in order to stop any possible transactions with the company’s assets. The tax department finds that the company is permanently insolvent. The first court hearing will take place on Aug. 30.

Noxtun belongs to Tal-linna Maailma Kaubanduse Keskus (69 percent) and IS Music Group, almost half of which belongs to Uhispank and the rest to Lauri Laubre and Stanislav Rubintski. According to BNS, Uhispank will not lose its investments in case of bankruptcy, because loans to the company are guaranteed with a mortgage in Uhispank’s favor.

Noxtun lately replaced Lauri Laubre with a new chairman of the board, which came as a surprise to Laubre. Laubre complained that the new management is planning to sell the company to businessman Urmas Past. According to Koit Luus, spokesman for the tax department, the change of ownership of the company is not a problem as long as assets are not moved away.

Noxtun has been selling nightclub tickets as theater tickets for three years now and Laubre is amazed, that the question of its legality rose so late.

Luus says that if a thief robs a shop five times and is not punished and is then caught on the sixth time, it does not mean that he would be left unpunished that time again. Luus said that the tax department does not have enough time to audit all the companies annually.

The IS Music Group used the same VAT trick when selling tickets for its other big nightclub in Haapsalu, Africa, from 1996 to 1997. The tax department is presently analyzing the documents of the Parnu nightclub Sunset Club.

According to Aripaev, Laubre, a major figure in the Estonian entertainment business, is planning a huge music event and construction of two new entertainment centers in Tallinn.

Meigo Pruudel, spokesman at IS Music Group, claims that the company continues its daily work as a concert organizer and if they were in financial trouble they would not have been able to organize these major events at all.

Source: http://www.baltictimes.com/news/articles/231/

Hansapank posts profit

The Baltic Times, TALLINN
Aug 05, 1999
By Kairi Kurm

Estonia’s biggest bank, Hansapank, reported a consolidated net profit of 390 million kroons ($ 26.19 million) for the first half of this year.

“Considering the macroeconomic environment, the results were respectable,” said Toomas Reisenbuk, analyst from Hansain-vestments. “It allows us to predict positive future perspectives for the bank, at least for the rest of the year.”

At the same time the Hansapank group had to increase its provisions for bad loans which had a major impact on the group’s results.

“The provisions of Han-sa Capital made a steep increase in the second quarter, which was quite a surprise for investors,” said Reisenbuk. He believes that the increasing number of leasing contracts has brought along a decrease in the quality of the leasing portfolio.

Hansa Capital had to increase loan provisions by 73 million kroons to 86 million kroons, while its net profit has dropped by 35.1 million kroons to 30.2 million kroons in the second quarter.

“But in general, the number of bad loans has not increased and the worst times are over,” said Reisenbuk.

The share of bad loans in the portfolio decreased from 1.5 percent at the beginning of the year to 0.9 percent by the end of May, he said. According to the conservative method of valuation, bad loans are loans which exceed the payment day by 60 days.

The group wrote off loans to the tune of 256.1 million kroons in the period of January through June. Hansapank’s management promised to concentrate on problem loans on the second half of the year.

The group’s second-quarter profit was smaller also due to changes of database and trademark.

The posted 390 million kroon consolidated net profit included a 233 million kroon profit from banking business in Estonia, nearly 11 million kroons from banking in Latvia, 96 million kroons from leasing and factoring, 1 million kroons from insurance and a loss of nearly 3 million kroons from banking in Lithuania.

The results also include the extra income of 49.5 million kroons from the sale of Estonian Insurance. As of June 30 the group’s total assets amounted to 30.88 billion kroons.

The release of consolidated results for the first half of the year did not bring a tangible increase in activity on the Tallinn Stock Exchange on July 28. The turnover from deals with Hansapank shares was worth 3.7 million kroons, while the share price dropped 1.5 percent to 81.5 kroons.

The international rating agency Moody’s analyzed Hansapank and decided not to change its present ratings. Hansapank has a long-term deposit rating of Baa3, a short term deposit rating of Prime 3, and a financial strength rating of D+.

Among the positive developments, Moody’s highlighted the stronger market position, changed ownership structure and high capitalization.

On the other hand Moody’s stressed the continuing weak economic climate and the fact that in a currency-board system, public institutions have very limited capabilities for providing support to financial institutions, Hansapank reported.

Source:  http://www.baltictimes.com/news/articles/220/