Things are moving ahead with the initial public offering of used car dealer AAA Auto Group. The Prague Stock Exchange (PSE) listing committee gave its approval to the company last week. AAA Auto also tried sweetening the offer by adding a big name to the group’s board when it brought on Vratislav Kulhánek, the former CEO and current supervisory board chairman of car maker Škoda Auto. Similarly, analysts will start weighing in on the company after having digested the group’s 219-page prospectus. In case some things get missed in perusing the massive number of pages, here’s a rundown on some of the more interesting tidbits found in the document: Slovak legal dispute AAA Auto is currently in two legal disputes with Slovak used car dealer Darex over the trademark to ”AAA Auto.” In 2003, Darex, the registered holder of the trademark ”AAA” in Slovakia, sued the Czech-based car dealer, and an appellate court upheld a preliminary injunction that forbade AAA Auto from using the ”AAA” trademark for any advertising purposes. A final judgment on the trademark is still pending, and the car dealer currently uses the trade name Autocentrum AAA Auto. Meanwhile, AAA Auto has filed a countersuit against Darex to prevent it from using the ”AAA” brand in Slovakia and to change its subsidiary name ”AAA Auto.” A first instance court rejected the suit; however an appeal is still pending.
Milan Smutný, AAA Auto’s spokesman, said the first case could be concluded by the end of September, although the latter may last another three years. AAA Auto argues it is the international holder of the ”AAA Auto” trademark; however it added in the prospectus that ”the results of litigation cannot be predicted, but even in the case of unfavorable decisions it shall not have any significant impact on our financial situation.” Share options The company plans to adopt a share option program for key officers and members of the management board. The total number of shares in the plan will not exceed 5 percent of the total number of shares issued. Share options will not be exercisable in the first three years and will have a 10-year lifetime. They are also nontransferable, and the management board will have the prerogative to apply performance criteria to options granted to key officers.
Debt-fueled expansion like many companies, AAA Auto has been borrowing more in recent years to fuel its expansion. Between 2004 and 2006, the group’s net debt has more than doubled to € 54.1 million (Kč 1.5 billion) from 26.4 million. As well, the group’s annual capital expenditure doubled during that time to 14.4 million from 6.8 million. But now with the proceeds from a listingwhich will go toward expansion ( 24 million) and paying debts ( 5 million for loans and 8.5 million for an outstanding shareholder’s loan)-the company expects capital expenditure (CAPEX) to grow to 23.5 million this year, with 10 million for growth in the Czech Republic and 7.4 million in Hungary. For the next three years, AAA Auto expects its CAPEX to represent 4 percent of annual revenues.
