Банкеръ Weekly



The Ministry of Transport and Telecommunications undertook several steps in order to cope with the problems, caused by insolvency of the Varna Shipyard. The first one of them was made on December 5, 2002, when a contract was signed between the company's trustee in bankruptcy Aneliya Srandeva and the Executive Director of Navigation Maritime Bulgare (Navibulgar) Geno Genov, under which the fleet took possession of the Varna Shipyard. Thus, Navibulgar was entitled to manage all assets and liabilities of the enterprise. After those manoeuvres the Transport Ministry is already free to sell the majority 75% package of the newly established company. It is offered at a minimum price of BGN25MN. According to pundits, the price could be much higher. The balance of 25% will remain in the hands of Navibulgar, which purchased the shipyard's assets from the Transport Ministry last April at BGN35.5MN. Thus, Navibulgar and the new owners of the offered majority package will become co-shareholders in the company which will be managing the shipyard's assets. According to the Transport Minister Plamen Petrov, only weighty firms have announced willingness to participate in the bidding. Among the companies which have filed letters of intent for participation in the tender is the German shipyard Wessels, which had announced its intentions to the Transport Ministry back in May 2002. In the words of Mr. Petrov, the company is interested in developing the operation of the Varna Shipyard. According to the Germans, however, the shipyard is suitable for repairs only, and would recycle and take to pieces old vessels that cannot be put out into the open sea.The UK company Camel Leard Gibraltar had announced its willingness to manage the Varna Shipyard back when Ivan Kostov headed the Bulgarian government. The British then wanted to support the rehabilitation plan for the shipyard but failed as they fell into a financial crisis themselves. Another UK company - Baker Investments Crop - is also among the candidates to participate in the joint venture.The Bulgarian company Maritime Technical Group - Varna, whose activities include design, development, repairs and exploitation of vessels, is on the list of candidates as well. It will bid in a consortium with Dolphin-1 (the company known by its lawsuits with SG EXPRESSBANK and BULBANK). One more Bulgarian company - AKB Corporation - will compete for the majoriy package in the Varna Shipyard. It will participate in the bidding in a consortium with quite an interesting firm - Iranian Shipping Line. The Middle East company is a monopolist on the gas and petrol market in Iran, but is engaged in a number of other operations as well. Applications for participation in the tender have been filed also by Greek and Ukrainian companies. Bulgaria's southern neighbour is represented by quite a serious consortium, headed by Elefsis Shipperds. Another Greek participant is Tsakos Shipping and Trading. The Ukrainian companies are Alvinston Holding and Danskan Metals. After announcing the terms for the establishment of the JV which will undertake the management of the Varna Shipyard, the Irish company Right Frame also listed among the candidates to become partners of Navibulgar. Other companies may apply for participation in the contest by March 27. The applications will be considered by a commission, appointed by the Transport Minister. The candidates will be ranked according to several criteria and the winner who will become Navibulgar's partner in the management of the shipyard will be known in the beginning of April.The requirements, set by the Transport Ministry to the candidates are quite heavy in the words of Mr. Petrov. For example, part of the deal will be to pledge 26% of the controlling package of shares (offered for sale) at the Central Depositary. In case of failure to fulfill the contract terms, Navibulgar will receive the blocked share and will thus regain control on the shipyard (because the blocked 26% plus the 25% stake which the fleet keeps, will ensure 51% for Navibulgar). The future owner of the majority package in the shipyard should realize a turnover of USD120MN from its operation within three years, or USD40MN annually. Another obligation of the potential buyer is to maintain the company's subject of activity and it shall not be allowed to sell main production assets. According to a clause in the contract, Navibulgar's vessels shall be repaired at the prime cost plus a minimum profit.The Transport Minister explained that Navibulgar will gain some BGN40-50MN from the deal. Part of the profit will come from the two ships Dolly and Trapezitsa, that will be part of the fleet in six months. In fact, Navibulgar gains also from repairing its own vessels at the shipyard. BGN1.5MN has been economized from the modernization of ships from July 2002 till now. The sale of the non-production assets of the Varna Shipyard - a stadium, housing building, etc., will bring Navibulgar about USD8-10MN. Within a few weeks Navibulgar will launch the projected corporative bond issue worth USD75MN. It's term has not been specified yet, but it will be most probably five years. Only institutional investors will be allowed to take part in the issue. The proceeds from the bond issue are earmarked for repayment of Navibulgar's liabilities to foreign banks. Thus, the ships which under the terms of the signed credit contracts are currently sailing under foreign flags, will be able to hoist the Bulgarian flag soon. This, according to Mr. Petrov will be of great importance for closing the Transport chapter in the negotiations with the EU.

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