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PRK Partners Helps Czech Towns Ensure Control of Water Utility

PRK Partners Helps Czech Towns Ensure Control of Water Utility

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PRK Partners has advised the Czech town of Kromeriz on the preparation and conclusion of a shareholders agreement between it, nearby town Morkovice-Slizany, and the Czech municipalities of Drinov and Zborovice — which combined hold a majority shareholding in VAK Kromeriz (a water utility company providing services to more than 100,000 persons and companies) — securing their majority position and control over the utility for the next 30 years. The project value is CZK 1.2 billion.

According to PRK Partners, "for many years, towns and municipalities in the Kromeriz region faced attempts from private investors [showing] enormous interest in obtaining a majority stake in VAK Kromeriz. The conclusion of the shareholders agreement ensures long-term, stable cooperation among the municipalities and will maintain the municipalities’ majority stake in VAK Kromeriz. This, in turn, will ensure socially acceptable water and sewerage rates for citizens and companies and will provide for the proper management of VAK Kromeriz. Establishing the agreement also sets the stage for maintaining maximum investment into the water supply and distribution infrastructure, with optimal use of existing subsidies and, last but not least, for maintaining the employment rate, including qualified jobs, in the Kromeriz region. The agreement also secures for all shareholders proper management, growth in assets and stable economic results of VAK Kromeriz."

PRK Partners describes the agreement as "a unique and unprecedented document," and reports that "what results from it will contribute to a stable situation within VAK Kromeriz and balanced economic development for the entire Kromeriz region (some 110,000 citizens)."

The agreement was drawn up as an open platform, and, according to PRK Partners, in the future, in addition to the four founding municipalities, other municipalities that are interested in cooperating may become involved and will have full unrestricted rights to their shares.

In an email to CEE Legal Matters, PRK Partners Partner Jakub Lichnovsky, who led the firm's team on the deal, explained that: "The transaction was unique due to the fact that we explained checks and balances of the established relationship to all signatories, its municipal councils, political representatives including public. We precisely stressed that Kromeriz must retain ruling power, but secure and provide guarantees to small shareholders. This was a particularly complex issue as Kromeriz would never allow to be controlled by majority of small shareholders. All signatories agreed not to sell to other shareholders than signatories, keeping the same division of shares, building value within the company, division of powers in statutory bodies, rules of management of the company — equal development of water and sewage utility in the whole region, high level of investment, utilization of EU subsidies, keeping know how and employment positions including highly educated specialists and the most important low price of water and infrastructure to help the community to grow.  We also advised on complex redrafting of the bylaws of VAK Kromeriz and represented Kromeriz at various general meetings of VAK Kromeriz. The whole process of negotiation took more than three years. Further, the Shareholders Agreement is open to other municipalities to join the Shareholders Agreement subject to their full and independent control over all rights associated with shares. We believe that this Shareholders Agreement brings a lot of benefits to the community, provides stability as every elections were interrupted by particular interests and intention of certain groups to privatize the company VAK Kromeriz."

PRK Partners at a Glance

PRK Partners, one of the leading Central European law firms, has been helping clients achieve their business objectives almost 30 years. Our team of lawyers, based in our Prague, Ostrava, and Bratislava offices, has a unique knowledge of Czech and Slovak law and of the business environment. Our lawyers studied at top law schools in the United States, United Kingdom, Switzerland and elsewhere. They also have experience working for leading international and domestic law firms in a number of jurisdictions. We speak your language, too. Our legal team is fluent in more than 15 languages, including all the key languages of the region.

PRK Partners has one of the most experienced legal teams on the market. We are consistently rated as one of the leading law firms in the region. We have received many significant honours and awards for our work. We represent the interests of international clients operating in the Czech Republic in an efficient way, combining local knowledge with an understanding of their global requirements in a business-friendly approach. We are one of the largest law firms in the Czech Republic and Slovakia. Our specialised teams of lawyers and tax advisors advise major global corporations as well as local companies. We provide comprehensive legal advice drawing on our profound knowledge of local law and markets.

Our legal advice delivers tangible results – as proven by our strong track record. We are the only Czech member firm of Lex Mundi, the world's leading network of independent law firms. As one of the leading law firms in the region, we have received many national and international awards, in some cases several years in a row. Honours include the Chambers Europe Award for Excellence, The Lawyer and Czech and Slovak Law Firm of the Year. Thanks to our close cooperation with leading international law firms and strong local players, we can serve clients in multiple jurisdictions around the globe. Our strong network means that we can meet your needs, wherever you do business.

PRK Partners has been repeatedly voted among the most socially responsible firms in the category of small and mid-sized firms and was awarded the bronze certificate at the annual TOP Responsible Firm of the Year Awards.

Our work is not only “business”: we have participated on a longstanding basis in a wide variety of pro bono projects and supported our partners from the non-profit sector (Kaplicky Centre Endowment Fund, Tereza Maxová Foundation, Czech Donors Forum, etc.).

Firm's website: www.prkpartners.com