[Intl-tobacco] US Lawsuit Influenced Bulgartabak Sale]

[robert weissman]

U.S. lawsuits influenced Bulgartabak flop-reports
Wed Nov 3, 2004 04:41 AM ET
SOFIA, Nov 3 (Reuters) - Bulgarian state tobacco firm Bulgartabak
(BTHG.BB: Quote,
Profile, Research) is a defendant in multiple U.S. lawsuits, which the
economy
minister said was behind a disappointing result in the state's selloff
of the
company, local media said. The long-awaited privatisation appeared to
have flopped
on Friday when British American Tobacco was the only company to make an
offer for
Bulgartabak's four best cigarette factories, which had been put on sale
in two
separate packages.

"Unfortunately, the Bulgarian plants are defendants in these lawsuits,"
Economy
Minister Lidia Shuleva was quoted as saying by agency Mediapool on its
website on
Wednesday. "They have exported cigarettes to the United States and are
currently
defendants for obligations which they have not allocated to escrow
accounts and
have not settled out of court."

Shuleva was cited as saying Britain's Imperial Tobacco had not made an offe=
r
because it was not implicated in the U.S. lawsuits and feared buying
Bulgartabak
assets could hurt its shares. The other short-listed bidder, Altria unit
Philip
Morris, did not bid either. Shuleva gave no details on the amounts of
the damages
being sought against Bulgartabak. She also did not say in which U.S.
states the
cases were being heard. Media and the public in the poor EU candidate
country had
been unaware of the U.S. court cases.


10:24 - 03.11.2004
Govt Official Says Sale Is Only Solution for Bulgarian Tobacco Monopoly

SOFIA (bnn)- Bulgarian tobacco industry unions are insisting that the
government
cancel the privatisation and restructuring of state tobacco monopoly
Bulgartabac
Holding AD (BTH), the private bTV channel reported Wednesday.Hundreds if
Bulgartabac workers rallied in front of Parliament in Sofia on Tuesday
to protest
restructuring of the company that would stop cigarette production in
four of its
units and would entail a full closure of a fifth one.

The protesters demanded also the government to pay them some leva (BGN)
4 million
in outstanding wages.

Deputy Prime Minister Lidia Shuleva dismissed the demands saying in
Parliament
=E2=80=9CBulgartabac=E2=80=9D privatisation is the only alternative for the=
 sector.=E2=80=9D

Shuleva said the government could no longer maintain state companies
with big
liabilities and taxpayers were not supposed to pay for them.

"I understand the people who chant =E2=80=9CGive us our money!=E2=80=9D Shu=
leva said.
=E2=80=9CBut if we
pay this money, it won=E2=80=99t be the money they earned but all taxpayers=
=E2=80=99
money. If this
goes on like this the liabilities will keep growing and people will be
more and
more displeased.=E2=80=9D

British American Tobacco last Friday has placed the only bid in a tender th=
e
government has called for Bulgartabac=E2=80=99s four best performing plants=
.

Other potential bidders, which included Philip Morris and Imperial
Tobacco, have
withdrawn citing lawsuits in the U.S. against Bulgartabac factories,
which missed
to warn consumers about the hazards of smoking.

They cited also lifting of protective tariffs on cigarettes due in 2007,
when
Bulgaria is scheduled to join the EU, which would expose local tobacco
industry to
strong competition.

EUR 1=3DBGN1.95583
$1=3DBGN1.53942