[Intl-tobacco] Serbia privatization

[Robert Weissman]

http://www.reuters.com/financeNewsArticle.jhtml?type=mergersNews&storyID=2284096

Serbia clears way for tobacco plant tenders

Tue February 25, 2003 09:09 AM ET

BELGRADE, Feb 25 (Reuters) - Serbia adopted on Tuesday a tobacco law
designed to clear the way for privatisation of
two plants that major international players have expressed interest in buying.

A British American Tobacco BATS.L official told reporters on Monday it
was interested in buying one of the plants to be
offered for sale shortly and in expanding its presence in the country,
where billions of cigarettes are lit each year.

Philip Morris MO.N , Japan Tobacco International 2914.T , and Imperial
Tobacco Group IMT.L have also expressed
interest in the plants, according to the country's privatisation agency.

Serbia's privatisation minister Aleksandar Vlahovic said tenders for the
plants are expected to be called at the end of
March or in early April following financial assessments.

The minister has said he hoped to get $1 billion from privatisation this
year and the main facilities to be put on sale are
the tobacco plants, a fuel chain and a mobile operator.

Under the tobacco law only companies which have a production capacity of
at least 2.5 billion cigarettes a year will be
allowed to compete in a public tender, and then only buy one of the two
plants to prevent a monopoly situation.

The law aims to protect the domestic tobacco growing industry by
obliging manufacturers to purchase at least 2,000
tonnes of home grown tobacco a year, or at least 50 percent of production.

Presenting the bill to parliament earlier this month Serbian Finance
Minister Bozidar Djelic said it set clear conditions for
those who wanted to produce and sell cigarettes and said it also marked
a further crackdown on rampant smuggling.

Two plants in southern Serbia - Duvanska Industrija Nis (DIN) and the
smaller Duvanska Industrija Vranje (DIV) -- are
expected to be put on sale.

BAT investment manager Alastair Ross told reporters his company saw
central and eastern Europe as strategically
important and Serbia as a very important market in the future where it
planned to expand.

"I can assure you our interest and our desire is to purchase one of the
existing tobacco plants. We will be working very
hard to ensure our bid for our preferred factory is successful," Ross said."

He could not express a preference for either of the plants before seeing
the tender material.

BAT said it now sells just over one billion cigarettes a year in Serbia,
with a market share of 11 percent.