Bulgartabac Holding Expected to be Sold in Four Months
Published on June 13th, 2011 09:59
Bulgartabac Holding is expected to be sold in four months to a large company, with the tender having no compulsory price floor. “I hope we will have a buyer for Bulgartabac in three or for months,” the executive of the Privatization Agency, Emil Karanikolov, stated.
The Bulgarian state owns 79.83% of the shares in the holding company, the rest are traded on the Bulgarian Stock Exchange. In spite of this privatization news, the mercantile price remained the same with 70 shares changing hands at 30.5 leva.
The Bulgartabac Holding will be sold during one auction and will be open only to strategic and financial investors; consortiums and off-shore companies won’t have the right to bid. One more condition is that bidders should be a bigger company than Bulgartabac what concerns annual profit and production turnover.
Strategic investors should have a profit of at least one billion euro from the sale of tobacco products over the past three years, and manufacturing capabilities to process about 12 000 tons of tobacco a year and produce at least 35 billion cigarettes per year. Within the previous year industry bidders should have produced at least 20 billion cigarettes and have processed about 10 000 tons of tobacco. “There are no Bulgarian companies that could meet these requirements; but the companies that could opt are Japan International Tobacco, Korea's KT&G and Philip Morris all of which have demonstrated their interest,” Karanikolov stated.
Also prospective investors are required to possess approximately 30 million euro of their own capital.
The biggest advantage in the bids will be given to the amount of tobacco that the new owners want to buy from Bulgarian producers, and than would be evaluated future investments.
All these criteria were adopted by the agency's supervisory board, which received disapproval from Socialist representative Roussi Statkov. “I stood against these requirements because I suppose that they do not correspond to the economic efficiency requirement” Statkov stated. “Previous recommendation was only to have the price, I would vote against if the framework won’t be changed,” he said.
The deadline for submitting bid is August 27 and the winner will be announced by September 6.
One more requirement for the new owner is to keep Bulgartabac's the same number of employees - 2400. At present Bulgartabac Holding owns two tobacco enterprises, in Sofia and Blagoevgrad; in 2004 it owned 9 such enterprises. Its value was estimated at 80 million leva.
Minister of Economy Traicho Traikov predicted that the company might be sold for about 100 million euro. Within the last years, Bulgartabac Holding has mainly focused on exports, which constituted for 80% of the 13 billion cigarettes sold by Bulgartabac. The main export markets were the Middle East and the Balkans.
