Restructuring of Bulgaria's Tobacco Holding Not Ruled out

Business | April 5, 2003, Saturday // 00:00
Restructuring of Bulgaria's Tobacco Holding Not Ruled out Valeri Dimitrov

The option for restructuring Bulgaria's tobacco holding should not be ruled out, Valeri Dimitrov, chairman of the economic parliamentary committee and MP of ruling party Simeon II National Movement said April 5.

Dimitrov explained that the new privatization procedure for Bulgaria's tobacco holding Bulgartabac is yet to be discussed. He suggested that a different approach to the sale be found since now Bulgartabac's sale is unattractive.

In the opinion of Dimitrov the also-rans who lost the bids for Bulgartabac will not be allowed to participate in a new sale procedure.

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.

On March 31 Parliamentary Speaker Ognyan Gerdzhikov said that the buyer has stepped back on its bank guarantees for financing the deal. He pointed out that Deutsche Bank has also failed to meet the incumbents' requirement to refrain from divesting Bulgartabac equity over a period of five years after the deal is signed.

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.

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