Bulgarian Court Freezes Assets of State Railways Cargo Unit

Business | February 8, 2013, Friday // 14:04
Bulgarian Court Freezes Assets of State Railways Cargo Unit: Bulgarian Court Freezes Assets of State Railways Cargo Unit The second attempt to sell the cargo unit of Bulgaria's State Railway company, BDZ, might fail as well. Photo by BGNES

The Sofia City Court has ordered a freeze of 100% of the assets of the cargo unit of Bulgarian State Railways company, BDZ Holding.

The information was reported by the Bulgarian Capital Daily, citing documents from the Trade Registry.

The freeze is on the request of the Dublin-based German-Irish bank Depfa Bank, which owns bonds from the first bond loan for BDZ. BDZ owes to Depfa about BGN 6.3 M.

The news comes on the heels of reports that five banks have filed a claim with the London Arbitration Court to declare BDZ Holding, bankrupt.

Experts comment that both – the freeze and the claim – would hurdle the privatization of the cargo unit. The freeze actually and effectively stops the procedure. Those who deal with frozen assets face prosecution under the law.

In mid-November 2012, Bulgaria's Privatization Agency launched a second privatization procedure for BDZ's Freight Services, after the first one fell through.

The second attempt to sell the cargo unit of BDZ only included strategic and financial investors.

The privatization of BDZ's profit making unit, Freight Services, is to secure money to cover huge debts of the company and help revive its other unit, Passenger Services.

However, experts from the railway sector have already said the State should not count on receiving much as the revenues of the cargo unit dropped by 30% in 2012, while the debt keeps climbing up.

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Tags: privatization, Depfa bank, freeze, Holding, assets, cargo unit, bond, Bulgarian State Railways, BDZ, Freight Services, Passenger Services
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