Bulgaria's state cigarette producer Bulgartabac Holding, which is undergoing a privatization procedure, announced a profit of BGN 1.319 M in the first quarter of 2011.

Its financial situation has seen a substantial improvement compared with the first quarter of 2010 when it had a net loss of BGN 1 675.

Bulgartabac's revenue in January-March 2011 amounted to BGN 7 M, an increase of 67.36% year-on-year (BGN 2.8 M more). In all of 2010, Bulgartabac Holding registered a profit of BGN 20 M.

On Wednesday, a day after the procedure to sell 80% of its assets was started by the government, the company announced that its improved results stem from deliberate state policies to boost both sales and financial discipline. The company's spending for salaries declined by 4% y/y and for amortization costs – by 38.5%.

Korea's КТ&G, Japan Tobacco International, Philip Morris and a few financial investors have declared interest in the privatization of Bulgaria's state cigarette producer Bulgartabac Holding, according to the consultant of the deal.

A majority stake - 79,83% - in Bulgaria's state cigarette producer Bulgartabac Holding, whose management has been harshly criticized in recent years, was put on sale on Tuesday after years of procrastination.

The long-delayed procedure will be officially given the go-ahead by the Agency for Privatization and Post-privatization Control through an announcement in the State Gazette on May 10.

The agency invited strategic and financial investors to buy tender documents by June 10. Binding offers have to be filed by the end of August.

"The buyer of Bulgartabac will be known in September," the Executive Director of the Agency for Privatisation Control Emil Karanikolov said at a press conference on Tuesday. The bidder with the highest offer will be selected for buyer. No initial price has been set.

Citigroup, the consultant preparing the sale of the state company, has made preliminary inquiries with about 100 potential strategic and financial investors from around the world with respect to Bulgartabac's privatization in order to make sure that all "serious" investors are aware of the sale of the Bulgarian cigarette company.

Korean KT&G had voiced interest in the privatization of Bulgartabac as early as the term of the government of Simeon Saxe-Coburg in 2001-2005.

KT&G is the largest cigarette and tobacco company in Korea, whose share accounts for 80% of the local market. Over the last ten years the company has been purchasing from Bulgartabac Bulgarian tobacco used in the manufacture of cigarettes.

Japan Tobacco Inc. (JT) is the third largest tobacco company in the world, having its headquarters in Tokyo. According to Euromonitor data, the share of the corporation in the world market makes 10.5%. JT International (JTI) is the international subdivision of "Japan Tobacco Inc.", formed as a result of purchase of the international tobacco business of American R.J. Reynolds International Concern by the Japanese company. The head office of JTI is in Geneva.

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