The Dr Simo Milošević Institute in Igalo recorded a profit of €6.05 million in the first nine months of the year, according to the company’s financial report for the first three quarters.
The result marks an improvement of €6.38 million compared to the same period last year, when the Institute reported a loss of €334,874.
At an extraordinary session held on October 21, the Institute’s Shareholders’ Assembly approved the issuance of ordinary shares through a closed offer to existing shareholders, based on pre-emptive rights.
Capital increase
The company’s total share capital amounts to €59.2 million, divided into 382,351 shares with a nominal value of €154.9 per share. A capital increase worth €23.5 million is planned.
Based on this decision, the Government and the largest minority shareholder, Vila Olive (co-owned by Žarko Rakčević), are expected to contribute a combined €21 million, of which the Government would provide around €14 million, in order to cover the Institute’s accumulated debt.
In early September, the Government and HTP Olive completed their public offer to purchase shares from minority shareholders, though the offer attracted limited interest.
The Institute’s Executive Director, Dr Zoran Kovačević, previously stated that he expects the funds to arrive by the end of this year or early next year, enabling the Institute to begin settling debts, particularly those owed to the Tax Administration, the Municipality of Herceg Novi, the Waterworks company, the Public Utility company, and the Electric Power Company, to which the Institute owes about €2 million.
“I hope that with the strong operational results we are achieving in 2025, we will be able to function much more easily in 2026,” Kovačević said.
Restructuring plan
Petar Rakčević, representing Vila Olive, said the Shareholders’ Assembly marked a crucial moment in implementing the Institute’s restructuring plan.
He stated that the planned capital increase of €23.5 million—through the issuance of ordinary shares—should allow the Institute to settle all outstanding obligations and achieve full financial stability.
Rakčević emphasized that all parties involved in the restructuring plan are following the agreed steps.
So far, ownership restructuring has been completed, and the children’s ward—earmarked for a new school in Igalo—has been divested in agreement with the local community. He added that the current phase is the key step and that the Institute is on track to become fully sustainable without further intervention.
The share issuance will be considered successful if 90.08% of the total 152,066 shares offered are sold.
Details of the restructuring plan
The plan includes the sale of the children’s ward purchased by the Government for €4.8 million for the construction of a new school, and the approved capital increase of October 21.
The Government and Vila Olive are expected to invest a total of €21 million—with the Government providing around €14 million—to cover long-term debts.
Overall investments of €88.06 million are envisioned:
- €61.6 million for long-term facility upgrades
- €1 million for a new information system
- €345,000 for marketing
- €21.4 million for liquidity
The State will invest €52.8 million, while the Institute and minority shareholders will contribute €35.2 million. The plan also allows for the potential sale of the “soliter” building and the E wing for €8.5 million, and requires the Institute to secure a loan of €14.46 million.
The plan was adopted on the third attempt after an agreement was reached between the Government and HTP Olive, which had initially opposed earlier versions.
Share buyback offer
In early September, the Government and HTP Olive completed their joint offer to buy shares from minority shareholders. The offer saw limited participation, as minority shareholders were dissatisfied with the proposed price. Only 3,394 shares—worth €176,400—were purchased, representing just 6.2% of the 54,846 minority-owned shares.
In the first round, 3,042 shares were sold: the Government purchased 1,208 shares for €70,000, and HTP Olive purchased 1,824 shares for €106,300. In the second round, an additional 352 shares were sold.
In July, the Government approved coordinated action with HTP Vila Olive to jointly purchase the 54,846 shares held by minority shareholders. The offer targeted all fully paid voting shares not owned by the Government, Rakčević’s company, or affiliated parties. The price offered was €58 per share.
