FOTEX HOLDING SE
Previous company name
FOTEX ELSO AMERIKAI-MAGYAR FOTOSZOLGALTATASI RT.
Name change date
Fotex Elso Amerikai-Magyar Fotoszolgaltatasi RT is a Hungarian company that focuses on the retail and wholesale provision of consumer goods and services. The company was incorporated on September 1990 and has a registered business office located in Budapest, Hungary.
Fotex works with a number of western manufacturers of consumer products as its distributor in Hungary. The company offers these products in a retail environment.
Fotex, together with its subsidiaries, includes household goods, furniture, consumer electronics, musical publishing, and photographic and optical materials. Its main goal has always been to produce and distribute high quality products and to ensure quality and service in retailing.
The Company has focused on the retail and wholesale provision of high-quality consumer goods and services. The Company works with a number of leading Western manufacturers of consumer products as their exclusive distributor in Hungary, offering these products in a retail environment. The activities of the Company and the subsidiaries through which they are conducted includes household goods, furniture, consumer electronics, musical publishing, distribution and retail, photographic and optical.
Description and history
1984: The Company, the First-American Photo Service LLC., is formed, the legal predecessor of the present FOTEX Ltd. Its founder is Mr.Gabor Varszegi, who previously lived in the United States for several years. The purpose of the Company is to perform quick photo processing. Initial share capital is HUF 11.2 million, out of which Skala-Coop receives 26% ownership, Fenyszov with 25 %, while the remaining 49 % belongs to the California registered company affiliated with Gabor Varszegi, called the American Writing Supply Corporation. The shares were later bought by Blackburn International Inc. a Panamian registered company controlled by Mr.Gabor Varszegi.
1988: Eastman Kodak purchases 5 % in the Company, paying with 1 million pcs rolls of Kodak films, with a then-current wholesale price of USD 2 per roll. In addition an agreement was reached whereby Kodak will sell rolls exclusively through the Company in Hungary; the Company starts contact lense production, selling its products first in wholesale, and from August in the Company’s own retail stores.
1989: The Company and Blackburn International Inc. set up Europtic LLC. a retail joint venture company, for the purpose of taking the ophthalmic business over from Fotex Ltd.
Foundation of Ajka Crystal LLC. (Ajka Kristaly Kft.) with an initial share capital of HUF 25.5 million continuing the business activity of the state owned Ajka Glass Factory (Ajkai Uveggyar).
1990: Ajka Crystal’s share capital is increased to HUF 55 million, then in September the Company purchases the assets and liabilities of Ajka Glass Factory as well as 20 % of the Ajka Crystal LLC. from the State Property Agency for HUF 137 million, which amount is then transferred to the account of the State Property Agency.
In the autumn Kodak makes the Company an offer for the purchase of a majority stake in the Company’s photographic retail service business. Kodak fails as the offer is rejected by the Company’s proprietors, and as a consequence Kodak sells its Fotex shares to Blackburn International Inc. (3.3 %) and to Skбla (1.7 %), for a total price of USD 1.5 million. The price reflects the offering price that Kodak had given the Company for the majority ownership of the photographic retail service. Henceforth the Company continues selling Kodak products, however now on a non-exclusive basis.
In September Fotex LLC. is converted into a company limited by shares, with a prescribed share capital of HUF 2.6 which represents 26 million shares at a nominal face value of HUF 100 value each.
In October, the Company acquires a 96 % holding in Azur Unio Ltd. from Citibank Budapest Ltd. Azur Unio Ltd. deals in cosmetics and household retail goods. The purchase price is HUF 309 million. Further, Blackburn International Inc. purchases 3 % shares from the Company in Azur Unio at a price of HUF 11 million.
In October, the Company does an initial public offering, issuing 5 million shares, at a price of HUF 199 per share (each share having HUF 100 nominal value) thus increasing the total number of the outstanding shares to 31 million, and thereby increasing the Company’s subscribed capital to HUF 965 million.
In December the Company acquired a 15 % stake in Kontur LLC. a company that operates a retail outlet chain in Gyor-Sopron county for HUF 40 million. Blackburn International Inc. assigns to the Company a 0.1 % participation in both Europtic and Ajka Crystal LLC. enabling the Company to consolidate them.
1991: The Company acquires a 50 % interest in Azurinvest Ltd. a retail chain for cosmetics and household goods at a price of HUF 258 million, and a further 1 % is acquired by Blackburn International Inc.
Ajka Crystal LLC. increases its share capital, in the course of which the Company buys the assets of Ajka Glass Factory, while Blackburn International Inc. contributes the Company’s shares. The contributed Fotex share price is equal to the quoted price of the Company’s March share issue.
In March, the Company raises its share capital through a private share issue for international institutional investors offering 13.7 million shares at a price of HUF 270 per share. During the offering the Company also liquidates 600 thousand treasury shares thus obtaining a total of 3.4 billion HUF equivalent of cash in hard currencies.
In May, the Company raises its share of voting rights in Azurinvest LTD. to 71.6 %. While Blackburn International acquires another 3.8 % in Azurinvest shares.
In September, the Company increases its stake in Kontъr to 51 %, and thereby becomes the majority shareholder in Kontur for a purchase price of HUF 400 million.
In December, the Company acquires 21,1 % interest and the management rights of the largest furniture market company, Domus Ltd., at a price of HUF 344 million and achieves a buying option till 1993 for a further 30 %. The transaction was closed definitely in 1992.
1992: After successfully challenging the privatisation tender of Ofotert LLC in court, the Company is awarded a 51 % stake in the Company. At the time Ofotert LLC is the country’s largest retail and wholesale company for photo and optical products. The cost for the ownership stake is priced at HUF 1.6 billion, out of which 1.2 billion is due to State Property Agency at closing, while another HUF 400 million is to be paid in two installments within a two year period. In addition the Company has the right to increase its stake in the Company up to a 75 % cap by injecting fresh capital. According to the agreement the transaction is deemed closed as of January 1993. During the closing of the transaction, Proficolor’s (owned by Ofotert, the Company as well as Blackburn International) HUF 1 million share capital is increased by HUF 510 million. In order to maintain its 49 % interest in the Company, Ofotert contributed HUF 250 million of photographic products (valued at wholesale). Blackburn International pays another HUF 260 million in cash to Proficolor LLC. which amount is used to purchase the occupancy rights of Ofotert’s 42 retail outlets. The Company.’s interest in Proficolor remains 2 %.
Blackburn International sells a 26 % stake in Proficolor to Eastman Kodak. Simultaneously Kodak gets the strategical and operational management rights of Proficolor LLC.
The Company trades 5.8 million of its own shares to Blackburn International in exchange for its minority stakes in Europtic, Ajka Crystal LLC. and Multivizio LLC.
In September, the Company acquires the spectacle frame manufacturer Granvisus LLC at a purchase price of HUF 26 million.
1993: In January, the Company pays the initial purchase price of Ofotert to the State Property Agency in the amount of HUF 1.2 billion (40 % in ‘compensation coupons’ and 60 % in cash). In addition to this the Company still has to pay two further installments in the course of 1993 and 1994 each in the value of HUF 400 million.
Fotex Plastics’ (earlier known as Granvisus LLC) share capital increases from HUF 38 million up to HUF 73 million. As of February, Proficolor LLC. takes over Ofotert’s photography business. This time Proficolor’s proprietors are Ofotert with 49 %, Eastman Kodak with 26 % (and the operational management rights as well), Blackburn International with 23% and the Company with 2 % shares.
In March, using an option purchased from the State Property Agency, the Company acquires a further 30 % of Domus Ltd. from the State Property Agency at a price of HUF 489 million. Out of this sum 40 % is paid by ‘compensation coupons’, and the rest is due in cash in four installments.
In May Vebu LLC., the owners of which are financed by the Company, acquires 62 % ownership of Balaton Furniture Factory’s (Balaton Butorgyar) shares at a price of HUF 218 million (out of which HUF 168 million is paid through an E loan, and the remaining HUF 50 million is paid in the form of compensation coupons).
In August, the Company sells 97 % of Fotex Property Development LLC.(Fotex Ingatlanfejleszto Kft.), selling another 3 % that December to Blackburn International.
In December, Blackburn International passes its’ pre-emptive purchase right over to the Company for the purchase of 97 % shares of Keravill Ltd. the largest electronic retailer in Hungary.
1994: In January, the Company and Westel 900GSM (one of Hungary’s two GSM concession operators) sign a long term distribution agreement.
In February, the Company’s management approves the acquisition of 99.5 % interest in Keravill Ltd., the largest household and entertainment electronics retailer in Hungary.
In April, the Company issues 14,350 thousand new registered shares at a price of USD 4.88 (HUF 507) per registered share (nominal value HUF 100 each) in the framework of a global offer outside Hungary.
In May, the Company purchases 97 % controlling interest in Keravill Ltd. while Keravill Ltd.retains another 2.5 % of its own shares.
In October, the Company purchases 78 % interest in Primo Ltd., a Hungarian retail company.
At the same time Domus buys 80.2 % stake in Dalia furniture company.
In November, the Company becomes the majority shareholder of Ruhбzati Bolt Rt. (previously a state owned clothing retail company). The Company’s direct and indirect stake is 50.1 % while the remainder is owned by the Austrian retail company known as Kleider Bauer.
The Company acquires 60 % interest in the advertisement company, Ayer (Europrizma).
The Company opens its first CD mega store in downtown Budapest.
In December, the Group takes total control over Domus Borsod LLC., after which it becomes Domus’ fully consolidated subsidiary. The Company buys a music cassette production company.
1995: In Januray, the Company acquires the exclusive distribution rights for Givenchy products in Hungary.
In May, Ruhazati Bolt Rt. is liquidated by its owners, pursuant to which the Company’s outlets are divided between the Company and Kleider Bauer.
Pro Primo LLC. is founded with 25 outlets.
Fotex Plastics’ new plant starts its production.
In June, Bausch and Lomb re-new their agreement with the Company for the exclusive distribution rights for their products.
The Company concludes a distribution agreement with Gianni Versace.
In September, the Company obtains the exclusive distribution rights for Kenzo as well as for Cartier products.
Bourjois signs similar contract with the Company for distribution on an exclusive basis.
In December, the Company finishes its central warehouse and warehouse-management system.
1996: In January, Fotex Records LLC. is founded for the purpose of distributing records, CD-s, audio-cassettes as well as videos.
Fotex 2000 LLC. takes over the management of the photography service and trading business from the Group.
From April the Group’s optical activities are henceforth managed by Fotex Optica.
Azur Unio’s and Azur Invests’s business activities are taken over by Azъr Trading Ltd. (Azur Kereskedelmi Rt.), later on this Company also continues to manage DAK LLC and its operations.
The Group leases 7200 square meters, and opens 12 outlets in Duna Plaza, Hungary’s first western type shopping centre.
Franchise agreements are concluded between Fotex Records and Virgin Records, as well as between Fotex Optika and Vision Express. The Company signs an exclusive distribution contract with Shiseido. The Company signs an agreement for the exclusive manufacturing and distribution of certain Pierre Cardin products throughout East Europe.
The Company issues for its existing shareholders a transformable bond in the amount of HUF 403.6 million.
At the end of 1996, the Company buys 17 % of Sugar shopping centre, enabling Keravill to expand its existing store to over 2000 square meters within the building.
1997: Fotex Cosmetics is founded, an independent company for exclusive distribution of cosmetics and toiletries. This was the last step to transform the Company into a direct financial holding company.
Kontur Stationery LLC. (Kontur Papir Kft.) fully separated from Kontur Ltd.’s stationery division, pursuant to which the profile clarification further continued in the stationery segment.
The Company acquires 89 % interest in Hungaroton Music Ltd., enabling to control the Hungaroton owned 9000 pieces of classical and pop music archival catalog recordings. For the sake of rationalizing the Company the merger of Hungaroton Gong and Hungaroton Classic was started.
Before the year ends the Company acquired a further 25 % interest in Ofotert Ltd., while its ownership in Dalia Ltd. was increased to 92 % of the Company.
The Group’s members Azur Ltd. and Ofotert Ltd. are the only Group members to open new retail outlets in several newly built malls across Hungary.
The rationale at the time is that no new stores will be opened in the newly constructed shopping malls due to the high operational costs and because the Company’s conservative market outlook.
At the same time the Company begins buying up its existing downtown outlets as well as other outlets in strategic locations.
The modernization of the Company’s information system (infrastructure) continues further and the second series of Gemini bonds are released in the amount of USD 2.5 million.
1998: The Company buys the majority shares of Kaposvбr Clothing Factory (Kaposvбri Ruhagyбr), ensuring the production background for Primo Ltd.’s wholesale and retail activities.
For the purpose of rationalization, Hungaroton Gong LLC. is merged with Hungaroton Classic LLC. The new company then begins operating under the new name of Hungaroton Records LLC.
The Comapny purchases a 33.91 % stake of Ofotert Ltd. from a third party. At the closing of this transaction Ofotйrt Ltd. becomes a fully owned subsidy of the Group. Ofotйrt Ltd. purchases 8.7 % of its own shares from its own employees. Through the rights granted to the Board by the Articles of Association, the Board decided on the 24th of July to issue a private placement of of 4.865.530 shares each having HUF 100 in nominal value. Due to this transaction the Group’s registered capital increased to HUF 6.793.365.000.
1999: The Company, Fotex 2000 LLC. and Fotex Optika LLC. established Keringatlan LLC. (real estate investment, utilization and management company), with the contribution of HUF 3 million cash and in-kind contribution of land, buildings and other properties at a book value of HUF 561.640 million. These properties continued to be leased by their original proprietors or tenants. In the course of the year reorganisation of the Company is continued, therefore in April Proprimo merged with Primo, while in September Proficolor merged with Ofotert, both transactions occurring at book value.
The Comapny purchased from its employees an additional 6.16 % ownership in Kaposvar Clothing Factory Ltd. (Kaposvбri Ruhagyar Rt.) at a price of HUF 11.190.000.
2000: The Company sold its 68 % share in Kaposvбr Clothing Factory Ltd with a loss of HUF 61 million. The Group continued its strategy of separating its real estate holdings from its commercial activities, and continued rationalisation of the Company. As a part of this restructuring Primo Real Estate LLC. (Primo Ingatlan Kft.) is spun off from Primo Ltd., Keravill Real Estate LLC. (Keravill Ingatlan Kft.) from Keravill Ltd. and Azur Real Estate LLC. (Azur Ingatlan Kft.) from Azur Ltd. The new companies’ profiles are real estate management.
In addition to this several mergers were also done as a part of the Group’s continued rationalisation. As part of the rationalisation program, companies within the Group with similar or the same business profiles are merged. As such Optikon and Ofotert are merged into Fotex Ofotert (previously Fotex Optika). All the activities of the predecessor companies are carried on by their legal successors.
The Company and Blackburn International Inc. launch the Group’s first internet endeavor, named Fotexnet. Through a series of purchases and capital increases (and a HUF 113 million in-kind contribution)- the Company becomes 90 % owner of Fotexnet LLC.
At the annual Board Meeting in April, owners of the Gemini bond, -which expired on the 31st March, 2000-, requested the conversion of 333 shares. Due to this transaction the Company’s registered capital is increased by another HUF 333 million. After the ruling of the Hungarian Court of Registry on the 17th August of 2000 the Company’s registered capital is HUF 7.072.365 thousand.
2001: On 31st July 2001. The Company bought 80 % of FTC Football and Sport LLC. (FTC) from Ferencvarosi Torna Club. The purchase price is HUF 2.400 million, out of which HUF 600 million is due at closing of the contract, while the rest is due in equal installments during the next three years. The outstanding amounts are to be charged with interest, at a rate which equals to precedent year’s average yield calculated for Hungarian state bonds. The purpose of this purchase unlike the Company’s previous investments was for reselling the Company, following FTC’s restructuring, rationalisation and recapitalisation.
In August, three Group members, Primo Real Estate LLC (Primo Ingatlan Kft.), Keravill Real Estate LLC., (Keravill Ingatlan Kft.) and Azъr Real Eatate LLC. (Azur Ingatlan Kft.) are merged into Keringatlan LLC. The Group’s real estate business is now handled by Keringatlan LLC.
The Company increases FTC’s registered capital by HUF 100 million, so the Group’s ownership reaches 99,42 %.
Sigma LLC. is founded in September. It is this newly established company’s main duty to lease and sell the Group’s available real estates properties, as well as to assist the Group in obtaining new properties. Simultaneously Sigma is also a real estate consultant and a leasing agent for third parties handling the transactions of other companies dealing with real estate development, leasing and operations.
The Group opened several retail outlets in MOM Park shopping centre on a 7.000 square meter floor area.
2002: In August, the Company increased its paid up capital in FTC by another HUF 50 million, as a consequence the Company’s ownership in FTC is raised to 99,61 %.
2003: The Company sold its shares in Gong Express (which conducts musical CD, VHS and DVD wholesale) to the Company’s minority shareholders, thereby closing down the Group’s wholesale activities in this field.
In November the sale of FTC Football Ltd. (previously FTC Football and Sport LLC.) is completed. At the same time, the Company purchases the exclusive rights to use the FTC logo, brand name as well as the certain merchandising rights associated with the club.
In December, the Company concludes an agreement with Westel Mobil Telecommunication Company to sell its own retail agent network at a price of HUF 1.500 million, which was established for the purpose of selling Westel services but consisting of independent agents from the Group itself.
In the course of the year the Company purchases 100 % interest both in Alfa Ors LLC. and Szivarvany Ltd. through Keringatlan LLC. Both portfolio management companies have a significant ownership in the Sugar Shopping Centre, as such upon concluding the transaction Fotex’s interest in Sugar Kozpont Egyesules reaches 98.36 %.
The Company purchases another 43.05 % in Kontur ltd. from one of Kontur’s minority shareholders, thus Kontur’s minority owners stake in the Company drops to 2.65 %.
2004: Due to shifting market conditions Keravill could not successfully continue its basic consumer electronic retail activity in a manner that was financially sound. The maintenance of this business activity would have required the owners to continuously inject capital and the management felt that such an undertaking was not in the best financial interest of the Company. Therefore the owners (the Company) decided to liquidate the Company as of Dec.10.2004.
The Company purchased from Carrefour an optical retail chain with consisted of 24 units located in two countries, the Czech Republic and Poland. All the optical stores are located in exceptional retail positions, i.e. in shopping centres.
The owners decide to stop Dalia Furniture Factory’s unprofitable production (due to continuous losses during the past three years). The Company temporarily continued its activity by leasing its assets.
Azur Ltd. started its withdrawal from the Group’s retail outlets, enabling the Group to lease these locations to third party tenants.
Due to similar reasons Kontur Ltd. also begins to liquidate its household equipment business.
Due to technological changes (analogue film processing technology is slowly being replaced by the digital film technology) Fotex 2000 LLC, which has persistently continued to lose sales, started the liquidation of its uneconomical service divisions. In addition to this the Company also took over from Keravill (within the framework of the Group structure) the franchise network which deals in Telecom products and service distribution. Keringatlan LLC. increases its direct and indirect holdings in the Sugбr Shopping Centre to 100 % and has also started the modernization of the Shopping Mall. The first part of the renewal program is completed in November, during this renovation the mall continues its retail operations.
2005: In March, the Company increases the registered share capital of Ajka Crystal LLC. pursuant to this the registered share capital of Ajka Crystal increases to HUF 1.337 million.
In April, Keravill’s liquidation is finalized.
In June, Balaton Furniture Factory Ltd. split into two separate companies, Bebufa LLC. which will continue the furniture production activity of the original Ltd.
In July, Alfaors LLC. and Szivarvany LLC. merge into Keringatlan LLC.
Fotex Ofotйrt Real Estate LLC. (Fotex Ofotйrt Ingatlan Kft.) is established by splitting from Fotex Ofotйrt Optika LLC. The new company’s purpose is real estate letting, development and investment.
In November, the Company registers in Cyprus a 100 % owned subsidiary, the Upington Ltd. by contributing the total optical division, as well as certain assets’ intangible rights. Upington’s duties are to sell companies, to manage real estate and other investments, as well as to look for new financing, consulting and investment possibilities.
In December Upington sells Fotex Ofotert LLC. (which represents the Group’s total optical retail holdings) to the Dutch Hal Invest.
According to the agreement concluded with Hal Invest, Fotex Ofotert Real Estate LLC. modifies its name to Azъr Real Estate LLC. (Azur Ingatlan Kft.)
In the course of the year, the Group’s member companies continue to purchase their own leased real estates from their owners (mostly municipalities). In addition recently closed Azur and Fotex 2000 stores are let to outside third parties.
Kontur Stationery LLC. (Kontъr Papir Kft.) closes its paper retail sales division by selling the business.
Focuses on the retail and wholesale provision of consumer goods and services
AJKA KRISTБLY ЬVEGIPARI KORLБTOLT FELELOSSЙGU TБRSASБG
ERNST & YOUNG KFT
US SIC Code
Parc d’activitйs 75
City province or state postal code
Phone: +352 95 05 74 74
Fax: +352 95 91 11
Country address: LUXEMBOURG
Website url: www.fotex.lu