The knock-on consequences of the financial difficulties of the Hungarian computer distribution and telecommunications company, Kontrax Group Kft, are beginning to make themselves felt to the Hungarian public. Kurir, a daily tabloid newspaper that had been backed by the company is expected to cease publication shortly, having reportedly accumulated $400,000 in debt. At the same time, residents of Budapest’s populous 10th, 17th and 183rd districts are being asked to come up with more capital to finance the First Pest Telecoms Company, which had promised to install telephone lines in return for equity capital from the inhabitants two years ago. First Pest had been collaborating closely with Kontrax’s telecommunications subsidiary on the project, and although the nature of their relationship is not entirely clear, Kontrax would have been the prime contractor. Local shareholders – many of who had applied to have telephone lines installed over 20 years ago and believed they had already paid for connection – are divided on whether to fork out additional cash to get the phones they want installed. Postabank Kft, a major Kontrax creditor, which recently repossessed the company’s office building, has meanwhile given an indication that it might be willing to attempt a bail out of Kontrax Group to prevent bankruptcy procedures instigated by Kontrax Holding against its own six key subsidiaries from running their course. However, any deal is likely to come too late in the day to save the company’s links with its Western partners and suppliers (such as Compaq Computer Corp and Ungermann-Bass Inc) or its key joint venture customers (which include Tetraapak) – and any more forays into the capital-intensive telecommunications business will almost certainly be off-limits for any reorgnised company.
