Opposition opposed: Sarajevo Canton Assembly approved mortgage on ZOI building in central Sarajevo for a 3 million KM loan

(Patria) - The Sarajevo Canton Assembly has given consent to the public company "ZOI '84" Olympic Center Sarajevo d.o.o. to establish a mortgage for a loan from Union Bank d.d. Sarajevo in the amount of 3,000,000 KM. Twenty representatives voted in favor of the decision.

The Supervisory Board of ZOI had previously given consent for long-term borrowing from Union Bank and the establishment of a lien on the business building at 21 Branilaca Sarajeva Street.

The Minister of Economy of Sarajevo Canton, Zlatko Mijatović, explained that the long-term borrowing from Union Bank will be used to close the existing long-term loan with the same bank and to settle obligations to suppliers.

- The loan repayment period is five years, the fixed interest rate is 4.95, and the loan processing fee is 15,000 KM. The total cost of the loan will be 407,000 KM, with a monthly installment of 56,500 KM over five years – said Mijatović.

With the arrival of the new management of ZOI in 2021, he clarified, the inherited debt amounted to 20 million KM, with court costs of 9 to 12 million KM, debt to public companies of 2.2 million KM, debt to the tax administration of nearly one million KM, and debt to suppliers of 4.5 million KM.

The loan debt in June 2021 amounted to 3.5 million KM.

From 2021 to 2024, the burden from these court proceedings ranged from 800,000 to 1.5 million KM, which was a significant strain on the company's liquidity and operations.

The issue of labor disputes has been resolved in more than 70 percent of cases, and in 2025, the resolution of the remaining 30 disputes, with an estimated value of up to 600,000 KM, is expected.

Other commercial disputes at the 2021 level amounted to seven million KM, including a lawsuit from the Environmental Protection Fund for around two million KM, as well as from other suppliers.

Although opposition representatives in the Sarajevo Canton Assembly were against the new loan, especially due to the mortgage on the building, arguing that the remaining debts could be paid from the Sarajevo Canton Budget, the Decision on the loan borrowing of ZOI was adopted by a majority vote.

SDA representative Haris Zahiragić, among other things, questioned why the Sarajevo Canton Government did not allocate three million KM for this purpose in the Draft Budget of Sarajevo Canton for 2025, but instead, as he said, "we are pushing ZOI into a loan and placing a mortgage on one of the most valuable buildings that Sarajevo Canton owns, in the best location."

- So, for 2,200 square meters, you are giving a mortgage for three million KM. The mortgage is not in the interest of protecting Sarajevo Canton's property. How does a building worth 20 million KM serve as collateral for a loan of three million KM – emphasized Zahiragić.

Since the loan is secured by the debtor's assets, whose founder is Sarajevo Canton, the consent of the Sarajevo Canton Assembly was required before concluding the loan agreement, i.e., the mortgage agreement.