After a decade of acrimonious disputes and several near reconciliations, it appears that the State Treasury and Dutch insurer Eureko have come to an agreement over Polish insurance giant PZU.

“This is the most important day of my term at the ministry,” Treasury Minister Aleksander Grad told a news conference. “Eureko has withdrawn its arbitration case, which Poland lost.”

The news took the market by surprise when it broke on Friday, a day after PZU’s general shareholders meeting. PZU’s shareholders agreed to pay out a zł.12.75 billion dividend at the meeting, but the ownership stalemate between the Treasury and Eureko seemed unbroken.

The deal will see Poland regain full control of PZU. Eureko will get zł.3.55 billion as part of the dividend payout as well as a further zł.1.22 billion when Poland sells a five percent stake in PZU to be put into a special investment vehicle in preparation for an IPO.

In turn, Eureko agreed to drop its arbitration case against Poland – in which it had been seeking tens of billions of złoty in damages from the Polish government – and consented to let PZU go public. It too will contribute to the investment vehicle, a stake of around 10 percent, and will sell another five percent stake on its own during the bourse listing.

“PZU will appear on the stock exchange. We hope this will happen by the end of next year,” Mr Grad said.

The insurer could be worth up to zł.36 billion and its 2010 listing could bring in zł.7.2 billion. After the IPO, the Treasury will hold half of PZU and Eureko will have 18 percent, to be reduced over time.

Addressing fears that the Dutch firm would immediately convert its dividend payout into euro, flooding the market, Eureko’s CFO, Gerard van Olphen, told journalists that his firm had currency hedges to cover much of the value of the deal.

News of the deal had a positive effect on the złoty, sending it p past its previous day’s close against the euro. “It appears a clear ‘sell [euro] on the news’ case,” Mateusz Szczurek, chief economist at ING Bank Śląski, said in a statement after the agreement.

(Reuters)