Final Word from Monday, January 17, 2011



The Czech financial news of the weekend was Radovan Vítek's claim on ČT that his "plurality" of the Sazka debt is enough for him to take control of the lottery company and to force a reorganization under the bankruptcy act. He prefers a Kč 10bn debt/equity swap that eliminates existing shareholders. The anti-news of the weekend - which received far more coverage - was the claim by CEO Aleš Hušák of D-rated Sazka that since the collapse of AAA-rated Salomon Brothers, the word "rating" is worse than the word "pedophile." Hušák surely knows that credit agencies have come under attack for overstating the creditworthiness of companies, not for understating it. But Hušák is well-trained in speaking to the feeble masses who buy his lottery tickets, not to a sophisticated audience that hears the drivel in his words. The Sazka case will be a test of which class of audience the insolvency judges fall into.[Czech Republic Standard & Poor's Bros.]

Glossary of difficult words

reorganization - a voluntary or court-ordered change in the capital structure of a company designed to make a fair settlement with creditors and permit the company to continue in operation;

plurality - an amount of something that exceeds the amount of all others but that does not constitute an absolute majority;

debt/equity swap - an exchange of debt for ownership;

creditworthiness - suitability of a person or company to receive credit;

feeble - weak; lacking physical strength;

drivel - nonsense.

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