CSG shares on Amsterdam bourse continue to fall, hit record low

Amsterdam/Prague, March 30 (CTK) - Shares of arms maker Czechoslovak Group (CSG) fell to a record low on the Amsterdam stock exchange today, and after dropping below the IPO price of EUR25 on Friday, they fell further to under EUR23 today, according to Euronext market data.

The Follow the Money server reports on growing scandals surrounding CSG's share offering. Some were previously highlighted by foreign media as well as Czech news site Seznam Zpravy, but CSG has denied any wrongdoing.

Shortly before 14:00, CSG shares were trading in Amsterdam at around EUR22.90, down 2.1 percent. They fell as low as EUR22.70 in the morning. They are now far below their record high of EUR35.50 reached shortly after the IPO.

Follow the Money cites multiple sources, including Czech and Slovak ones. For example, in one of its articles on this topic, Seznam Zpravy reported that, following CSG's IPO, questions have arisen regarding the completeness of the company’s prospectus. It also mentions businessman Petr Kratochvil and his share buyout option.

"Our reporting recently flagged an early warning sign: a Spanish ammunition factory and subsidiary of the Czech defence mammoth was suspended by NATO's procurement agency. There were 'serious allegations' that the subsidiary played a part in a corruption scheme currently under investigation by Belgian authorities, according to documents we obtained," the website said.

CSG responded to this information at the time by stating that there were no irregularities between its Spanish ammunition factory, Fabrica de Municiones de Granada (FMG), and the NATO Support and Procurement Agency (NSPA).

Follow the Money also mentions findings by the Slovak investigative journalism team ICJK, which reported on a major contract that painted a very bright picture of CSG's financial future. "So bright it may have blinded investors looking to buy shares in the company," the website writes.

CSG has signed contracts with the Slovak Defence Ministry worth over EUR60bn (roughly CZK1,500bn), but the catch is that most of them are so-called framework agreements that the company may never actually have to fulfill, writes Follow the Money. ICJK's calculations suggest that the company lacks the capacity to do so. "If that's the case, this EUR60bn figure does little more than inflate the perceived value of CSG shares," the website adds.

Czechoslovak Group raised approximately EUR3.8bn (CZK92.2bn) through its share sale at the end of January this year to support its growth as one of the leading arms manufacturers in the European Union. According to analysts, it was the largest-ever IPO by a defence company.

CSG is owned by businessman Michal Strnad, who is also the wealthiest Czech. Earlier this month, Forbes magazine estimated his fortune at USD31.1bn (over CZK653bn). Czech news site Novinky.cz writes today that Strnad became EUR140bn poorer following the drop in CSG's stock price.

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