The Tallinna Farmaatsiatehas pharmaceutical plant is the first company that has sent an application for ending the quotation, but several companies have had the same idea. According to a report by Baltic News Service, Estonian Security Service and Merko Ehitus, a construction firm, would also like to end trading of their shares on the stock exchange. Most say having shares on the TALSE is not as attractive as it once was and requires a lot of time and committment.
Indrek Ild, the sales manager of the pharmaceutical plant, said there were three reasons why the company wanted to be taken off the exchange. The first is the declining economic situation in Estonia and Russia where sales have been low. Also, she said investors have shown little interest in buying company shares.
Finally, she said bad news about the companys' stock price has been bad for business. The company is planning to decrease its operating costs and production costs by shortening working days and dismissing 85 employees.
"The decision was induced by the impact of all three factors," explained Ild. "If the shares go badly, it does not mean that the company's value has decreased. Neither does it mean that our product's quality is not good enough."
Arno Kaseniit, head of the company's board, added, "It is not good, if a share falls from 250 kroons to 5 kroons," referring to the movement of the shares last year.
In addition, pharmaceuticals production and sales have decreased recently due to the Russian crisis and the bad economic situation in Estonia.
"Our production has decreased significantly. About 40 percent of the company's sales are targeted at the Russian market," said Ild.
The company has changed the forms of cooperation with Russian clients and has put a lot of effort into finding new customers in the West and in the Baltic states.
The company is more intensively cooperating with the Latvian drug maker Grindex to market medicines on new markets and increase its share on the Estonian market. Grindex also owns 55 percent of Tallinn pharmaceutical's shares, and the press has speculated on Tallinn pharmaceutical's move to Latvia.
During the first half of the year, the plant posted a loss of 250,000 kroons ($19,200) while last year, profit for the same period was 21 million kroons. The group's sales turnover for the six months was 57.5 million kroons, while the turnover for 1997 was about 82 million kroons.
According to Gert Tiivas, general director of the TALSE, the company's removal request did not correspond to requirements of the bourse regulation.
"They did not give any solutions for the shareholders and did not describe their further actions on how to protect the rights of all the shareholders," Tiivas said. "It is more difficult for a shareholder to trade on a free market and it is also difficult to get adequate information about the company if it is not listed on the TALSE."
The pharmaceutical company was also fined 100,000 kroons for its actions since the application reached the TALSE a day after the decision was made. Bourse regulations require that all information that might influence a company's stock price be immediately relayed to stock exchange officials.
Trading of the shares was suspended from Oct. 16, until Oct. 20, for TALSE to make a decision in this matter.
The TALSE commission decided to transfer the shares from the main list to the supplementary list since the average market value of the shares over the past six months had dropped below 200 million kroons.
The council of the pharmaceutical plant will discuss further actions at a meeting next week.