ECONOMY

Major tobacco manufacturers notably absent from the privatization of Bulgarian tobacco monopoly

SOFIA – Bulgaria has invited all five candidates for its tobacco monopoly Bulgartabak to submit final offers for an 80-percent stake by July 22, Economy Minister Nikolai Vassilev said yesterday. He said buying as much domestically produced tobacco as possible, rather than the price, was the most important criterion for one of the Balkan country’s key sell-offs this year, vital to attracting investment in one of the poorest European Union aspirant nations. But the lack of tobacco majors among the five candidates, which had all submitted indicative offers for Bulgartabak by the May 7 deadline, deals a clear setback to the reformist government’s efforts to attract foreign majors. «The Privatization Agency has decided to offer exactly 80 percent of Bulgartabak at the second stage of the tender, as bidders’ indicative offers make it clear that they all are targeting this stake,» Vassilev told a news conference. The government, which will keep a golden share in Bulgartabak, has initially offered a majority stake of up to 80 percent. It did not set a minimum price but had forecast $100 million in minimum revenue from the sale. Vassilev said the bidders included Russia’s Metatabak Consortium; Moscow-based private bank Regionalna Perspektiva, formerly Odintsovo; Hungary’s cigarette producer V. Tabac, and Sofia-based Tobacco Capital Partners, which local media linked to Deutsche Bank. The fifth bidder is a Vienna-based consortium called Tobacco Holding, comprising US-based International Tobacco Fund, Greece’s Michailidis Group, Austrian Raiffeisen Bank’s Raiffeisen Investment and Invesco, which is controlled by fund managers Amvescap. Vassilev and Privatization Agency officials declined to give details or comment on the five indicative offers. But analysts have said Bulgaria will find it hard to sell Bulgartabak because it has decided to offer the business as a whole rather than selling its top factories separately. Bulgartabak has 22 domestic subsidiaries, including 12 processing factories, nine cigarette factories and one producer of tobacco driers, filters and packing, of which only two are profitable. It also has five subsidiaries in Russia and one each in Ukraine, Romania and Yugoslavia, all of which are posting losses. Last month, British American Tobacco, the world second-largest cigarette firm, said it did not bid for Bulgartabak as it was only interested in its key assets. A previous attempt to sell Bulgartabak failed in 2000, when the company did not attract any bidders.