AVAS takes Kastamonu to court

Kastamonu Entegre, the owner of Romania-based Prolemn Reghin and the biggest player in the Turkish wood industry, was taken to court by the State Assets Resolution Authority (AVAS) for not complying in due time with the investment commitments it had undertaken. Under the clauses in the contract for the takeover of Prolemn, Kastamonu committed to invest 75 million dollars (59.8 million euros) in the August 1998 – December 2002 period. The Turkish group, however, only managed to invest 50 million dollars (40 million euros). “At the time when the contract was closed, the legal norms then in place exempted foreign investors from the payment of certain taxes, but the budget law introduced in 1999 annulled these incentives. Under the circumstances, Kastamonu was rendered unable to invest the 75 million dollars in the period established under the contract. In addition to this, Kastamonu representatives notified the AVAS that the investment would span beyond 2002,” said Zoltan Bodu, legal adviser with Prolemn.