[Intl-tobacco] Bulgaria starts sale of cigarette maker Bulgartabak

[robert.weissman@essentialinformation.org]

http://www.tobaccojournal.com/show_artikel.php3?id=3905
2004-07-01
BULGARIA
Bulgaria starts sale of cigarette maker Bulgartabak
Bulgaria launched the sale of state tobacco company Bulgartabak on 1 July
2004, offering its four best mills to strategic investors in a deal key to
the European Union candidate's efforts to boost investor confidence. Economy
Minister Lidia Shuleva said Bulgartabak Holding would sell the four plants
in two packages, one comprising its Sofia and Plovdiv units and one its
Blagoevgrad and Slantse Stara Zagora mills. The company's other five,
worse-performing cigarette-making plants will be stripped of their licences,
and the two packages will then divide a monopoly previously held by
Bulgartabak. "By launching the sales, we aim to secure stable developments
in the tobacco sector and good privatisation revenues," Shuleva said. "The
start of the privatisation will be followed by the issuing of two licences
for cigarette production. At the moment, there is a monopoly, and thus we
will break it in two." Experts say strategic investors are interested in
buying into the ex-communist state's tightly controlled cigarette market,
where Bulgartabak brands have a 98 per cent share. They include Britain's
Gallaher and Imperial Tobacco, Philip Morris, British American Tobacco and
Korean KT&G. Shuleva said Bulgartabak, which is controlled by the cabinet,
would invite investors this month and bids would be submitted in September.
Winners for the two packages - which cannot go to the same bidder -- will be
chosen in November and the deal will be closed by the year end. Bulgartabak
will also sell its packaging plant in a separate tender by early next year,
she said. The government decided on the piecemeal sale after turning down a
Deutsche Bank-led consortium last year that had offered to buy 80 percent of
the firm as a whole for 110 million euros. Bulgartabak, which consists of 22
mainly loss-making domestic units, currently has 12 processing factories,
nine cigarette factories and one producer of tobacco dryers, filters and
packing material. It also has five subsidiaries in Russia and one each in
Ukraine, Romania, and Serbia.