ECONOMY

Bulgaria announces tobacco firm sale to Deutsche Bank — again

SOFIA – The Bulgarian government on Monday named a Deutsche Bank-led consortium as the buyer of tobacco monopoly Bulgartabak, aiming to complete the landmark sale that has been long-delayed by court battles. The pro-Western government confirmed Deutsche’s consortium as a favorite after the Supreme Court annulled in December an earlier decision by the sell-off agency to pick the group’s 110-million-euro ($121 million) bid for 80 percent of Bulgartabak. The sell-off of Bulgartabak and that of telecom monopoly BTC are viewed by foreign analysts as a test for the government’s ability to press ahead with privatization and attract badly needed investment to one of the poorest European Union aspirants. «The sale of Bulgartabak is a landmark one for our government,» Economy Minister Nikolai Vassilev told a news conference after an extraordinary Cabinet session. «With this deal, the government guarantees the development of the tobacco sector and jobs for tens of thousands of people. This deal will also meet our goal of attracting major foreign investors.» The sale must be approved by Parliament later this week. The ruling coalition of the ex-king, now Prime Minister Simeon Saxe-Coburg, has 130 seats in the 240-strong chamber. The Deutsche consortium has pledged to cover 38 million euros’ worth of outstanding debt which Bulgartabak owes to the state budget and invest 71.2 million euros over the next five years, Vassilev said. The consortium has also undertaken to increase annual tobacco purchases from 40,000 tons in 2004 to 62,000 in 2007 and not to sell Bulgartabak or some of its 22 domestic factories and five foreign subsidiaries over the next five years. Bulgartabak’s sale had been in the hands of the legal system for months after three failed bidders – Russia’s Metatabak, Vienna-based consortium Tobacco Holding GmbH and Russia’s Rosbulgartabak – challenged the procedure in the Supreme Court last September, saying it was biased. The court’s decision to annul the sale and recommend that higher offers be sought dealt a setback to the government’s efforts to sign a deal by the end of last year. But Parliament passed amendments last month to the privatization law that allowed for the sale process to continue with all four candidates without seeking higher bids. Under the amendments, the sell-off agency and the government will handle the sales of 15 strategic companies, including Bulgartabak, allowing no room for appeals in courts. However, completion of the Bulgartabak sale, launched a year ago, may be delayed once again if the country’s Constitutional Court declares the amendment invalid, a move sought by the opposition Socialists, the center-right UDF party and President Georgi Parvanov. Bulgaria has several supreme courts and one constitutional court. Local analysts said the government was in a hurry to confirm Deutsche’s consortium as the winner and sought Parliament’s approval of the deal before the Constitutional Court announced its ruling that might put the sale into a new deadlock. Deutsche Bank’s consortium comprises Sofia-based Tobacco Capital Partners and a Deutsche Dutch unit, Clar Innis.