Consultant on Bulgartabac deal Creditanstalt Investment Bank will receive a fee of USD 283,333, with expenses for conducting the procedure amounting to EUR 93,873, the Privatisation Agency announced in a statement, circulated to the media.

The statement came to dismiss accusations by left-wing MPs of a hefty consultancy fee, amounting to BGN 14 M.

Creditanstalt Investment Bank consultancy fee will be paid in two parts, under the consultancy contract on the privatisation procedure for an 80% stake in Bulgaria's tobacco giant Bulgartabac, dated November 2, 2001.

The first part of the fee is for the preparation of a legal analysis, draft privatisation strategy, information memorandum, assessment of Bulgartabac Holding privatisation and documentation, including its updating during the sale procedure. The amount of this part of the fee is fixed.

The second section of the contract sets the amount of the fee as a percentage of the sale price, to be paid after a successful conclusion of the deal.

Following the failure of the deal, this fee will not be paid, the statement of the Privatisation Agency says.

The Cabinet approved April 3 the proposal of the Privatisation Agency to discontinue sale negotiations with Tobacco Capital Partners, as well as the whole privatisation procedure for Bulgaria's tobacco holding Bulgartabac.

The procedure for an 80% stake in Bulagrtabac equity was won twice in 2001 and 2002 by Deutsche Bank-owned Tobacco Capital Partners. In the middle of March Bulgaria's Parliament approved the Cabinet's decision for naming EUR 110 M bid of Deutsche Bank-owned Tobacco Capital Partners a winner for 80% stake in Bulgaria's tobacco monopoly Bulgartabac.

The practice of fixing minimum purchase prices for the local tobacco crop was among the contentious issues that snagged sale talks for Bulgartabac. The other included Deutsche Bank-requested shareout of the commitment to buy local tobacco between all licensed local cigarette makers and a ban on divesting Bulgartabac equity over a period of five years.

The main factor that tripped the sale however was the bank guarantee, which in the words of Economy Minister Vassilev, did not comply with the Privatisation Agency requirements. The bank guarantee arrived as late as Saturday morning.

According to Minister Vassilev TCP has rejected the clause that bans divesting Bulgartabac equity over a period of five years. Work-arounds could have been found on most of the contentious issues except the bank guarantees, he added.

In a separate development it became clear that a 12, 838 percent stake in tobacco monopoly Bulgratbac Holding will be sold on the local bourse shortly against non-cash instruments.

No specific target dates have been named.

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