Ukrzaliznytsia says CEO has two more years

Polish citizen Wojciech Balczun, who was appointed CEO of Ukrainian railway monopoly Ukrzaliznytsia (UZ, RAILUA) in June 2016, is eligible to hold his position for the next two years, UZ reported in its June 21 press release. Balczun signed a one-year employment contract that ended on June 5, 2017, which led his opponents, including Infrastructure Minister Volodymyr Omelian, to expect his soon replacement should the Cabinet not renew the contract.

But while the Cabinet didn’t renew it, the contract is nonetheless automatically prolonged for two more years, according to UZ’s legal director, who referred to company statutes and the state employment code. In particular, the code states that employment is extended for an indefinite period after the end of a contract, unless it is explicitly terminated. Meanwhile, company statutes stipulate that the CEO is appointed for three years, so Balczun has two more years to serve, UZ concluded.

Alexander Paraschiy: Balczun enjoys the best reputation of all of UZ’s CEOs, so the confirmation that he will stay with the company may add some optimism for RAILUA bondholders. While we can expect some positive reaction from the bond market, we remain neutral on the company’s Eurobonds.