ICN to Get Seized Belgrade Plant Back

Shareholders of a Belgrade pharmaceutical plant seized early last year from ICN Pharmaceuticals Inc. agreed Tuesday that majority ownership should be returned to the Costa Mesa drug maker, Yugoslavia’s Beta news agency reported.

Beta quoted Vladan Batic, ICN’s lawyer in Yugoslavia, as saying that the shareholders, who include workers at the ICN Galenika plant, had agreed to set up a crisis committee to run the factory temporarily.

ICN Chairman Milan Panic and other ICN executives met with members of the Yugoslav government under newly elected President Vojislav Kostunica to discuss the return of the plant to the company, said David Watt, ICN’s general counsel.

Watt said ICN expects to regain control of the plant “relatively soon.�

Plant managers installed under former Yugoslav President Slobodan Milosevic, whom Kostunica unseated last month, left their offices in the morning, Beta news said.

ICN will make a formal request for the facility, which once generated annual sales of $250 million, after Kostunica completes the formation of his government, Watt said.

About 1,000 workers greeted Panic at the drug manufacturing plant Monday, urging him and the former ICN management group to resume running the factory, the company said.

Panic had interrupted a European business trip Monday to rush into his native Belgrade after the fall of Milosevic, his nemesis.

Troops had seized the plant, 75% owned by ICN and 25% owned by a state-run company, in February 1999, claiming ICN had failed to make promised investments. The company said it fulfilled all its obligations.

The government reduced ICN’s stake to 36%, and the company sued in a U.S. court.

But Milosevic, who had ousted Panic as Yugoslav prime minister nearly eight years ago and then defeated him in a presidential election, conceded his own defeat Friday.

Panic, who defected from then-Soviet-controlled Yugoslavia in 1955 and returned in 1992 to serve nine months as prime minister, harbors no political ambitions “right now� beyond supporting the new regime and democracy in Yugoslavia, Watt said.

Panic was unavailable for comment.

ICN also plans eventually to ask the new government to pay $176 million it said the previous regime owes it for pharmaceutical products. The company wrote off the amount, but still claims the amount on its books. The drug maker doesn’t expect to receive the sum soon, but might be willing to accept goods in lieu of cash, Watt said.

Regaining the Galenika plant could help ICN’s bottom line, Watt said.

“It had great value prior to its seizure, and we think it will have great value in the future,� he said.

Not everybody shares the company’s sentiment.

Eric Knight, managing director of Special Situations Partners in the Cayman Islands, said ICN’s stock has slumped because of the uncertainty surrounding its Eastern European operations and that reentering the Yugoslav market will only exacerbate those fears.

Special Situations, one of several dissident institutional investors, is threatening to nominate its own slate of directors to replace the current board.

In related news, ICN said it plans to hold its annual shareholder meeting on Dec. 18. The meeting is expected to be contentious unless a deal is worked out beforehand with dissident shareholders who are critical of plans to split the company into three publicly traded entities, with two of them controlled by ICN.

ICN stock closed at $34.50 Tuesday, up 94 cents on New York Stock Exchange trading.

Bloomberg News was used in compiling this report.