Deutsche Bank-owned consortium Tobacco Capital Partners was named preferred buyer of an 80% stake in Bulgaria's tobacco monopoly Bulgartabac, the Cabinet decided at an extraordinary meeting March 10.

The price of the deal is EUR 110 M.

The Cabinet's decision has been based on the Privatisation Agency (PA) report, which presented the content of all offers submitted within the fixed deadline.

The final decision is to be forwarded later on Monday to parliament, which, under the Privatization and Privatization Control Act as last amended, is solely competent to approve the transaction.

PA will hold negotiations with the preferred buyer, following the approval of the Parliament. The privatisation contract will be submitted for approval by PA Supervisory Board and the Cabinet.

The contract with the buyer is to be signed thirty days after the approval of the Parliament. It is obliged to cover all outstanding liabilities of the holding, which amount to EUR 38, 5 M. Investments over the next five years are set at EUR 71 M. The buyer has committed to keep unchanged headcount of 6000.

Metatabak, one of the four also-rans in the privatisation of Bulgartabac monopoly, did not confirm the validity of its bid by the March 10 deadline. Metatabak did not submit the requested deposit of EUR 2,5 M either.

Metatabak was one of the four candidates that submitted final bids on July 22, 2002. It was ranked second after provisional winner Tobacco Capital Partners. Metatabak was disqualified over its failure to submit additional information required by the PA.

At the beginning of March the Privatisation Agency announced it has asked Consortium Tobacco Capital Partners, 100 percent owned by Deutsche Bank, and Metatabak to confirm the validity of their offers by April 20, 2003.

In the middle of December a five-member panel of the Supreme Administrative Court (SAC) upheld the cancellation of a deal to sell Bulgartabac to Tobacco Capital Partners (TCP).

Russia's consortium Rosbulgartabac and Austria's Tobacco Holding GmbH, two of the bidders who lost the initial bid for 80% stake in Bulgaria's tobacco giant Bulgartabac, already confirmed the validity of their bids at the end of January, when they were extended by ninety days.

The recently adopted by Parliament amendments to the Privatisation Act actually revoked the court's ruling. The new rules also revoke SAC ruling for seeking sweetened offers.

Georgi Tassev, Metatabak representative, motivated the decision to exit the sale, with the ruling of Supreme Administrative Court five-member panel.

In the words of Tassev the Privatization Agency is obliged to comply with the court ruling despite the amendments to the privatisation act.

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