The new left-wing government of Slovakia has cancelled the contract to privatise Bratislava Airport. A spokesman for Vienna Airports, which led the TwoOne consortium on the successful bid for the privatisation, described the decision as “surprising” and said it would take “all necessary legal steps” to try to have the contact enforced.
That is likely to mean both sides face each other in the Paris Arbitrary Court in France, which is nominated as the competent arbitration authority of disputes under the original privatisation terms.
On August 17, Slovakian Transport Minister Lubomir Vazny proposed that the government of Prime Minister Robert Fico, led by the left-wing Direction – Social Democracy (Smer) party, withdraw from the privatisation contract.
The contract had been agreed with the previous administration In February. Under that deal, the TwoOne consortium of Vienna Airport, Czech private equity group Penta Group and Austrian bank Raiffeisenbank agreed to acquire a 66% interest in Letisko MR Stefanika-Airport Bratislava (Bratislava Airport) and Koisce Airport from the Slovak government, in a leveraged buyout transaction. The deal was agreed by the government, subject to regulatory clearance.
On August 14, the Anti-monopoly Office postponed its ruling for a second time on the deal, saying Vienna Airport had failed to meet conditions set for the sale.
That decision looks to have been the pretext for the government to declare the original contract invalid, in what one source close to the deal described as “a blow to the entire investment climate” in Slovakia.
The move by the government follows its victory in the June 2006 elections on a left-wing platform, described as populist by critics, which will see Slovakia move away from the open-market, low-tax regime favoured by the previous regime.