Банкеръ Weekly



Balkanpharma Holding and the State Securities Exchange Commission (SSEC) are waiting for the decision of the Supreme Administrative Court (SAC), which should extend its ruling on the lawsuits between them by December 12. The disputes between the leading Bulgarian pharmaceutical company and the SSEC began after the commission imposed a ban for publishing the holding's tender offers for buying out the shares of Balkanpharma's subsidiaries in Doupnitsa and Troyan from its small sharehodlers. Thus, on August 15, 2001, the SSEC (which regulates the capital markets' activities) practically barred the two enterprises' from withdrawing their paper from the stock exchange. As could be expected, the holding's managers were the most discontented with that decision because for almost a year they had been planning a merger into a single structure of all companies in which Balkanpharma holds majority stakes. In fact, the merger can be made, but the Public Offering of Securities Act (POSA) stipulates that if just one of the merging enterprises is public (i.e. its shares are traded on the stock exchange), the new structure should be public as well. That is definitely not up to the taste of the holding's managers. Therefore, they litigated the decisions about the two Balkanpharma subdidiaries, made on Augfust 15. After SAC's session on November 12, SSEC's representatives said they would appeal against an eventual defeat in the struggle with the pharmaceutical holding. Thus, the ruling of the court of second instance (a 5-member team of the SAC) will be extended in the spring of 2002. But whatever is SAC's ruling on the claim, the dispute seems to become pointless, because until then amendments to the POSE (to enter Parliament for discussions within a few week) are expected to be passed. The drafted provisions stipulate that a majority shareholder may write off a company from the register of public issuers if it holds more than 90% of its capital and the owners of at least half of the other shares accept the tender offer, placed by the majority shareholder. Balkanpharma fulfils the first condition. The second one, however, poses a serious problem, especially in the case with the Troyan-based enterprise, where the holding owns a 90.58% stake, but 5% of the factory's assets are in the hands of the Cypriot offshore company Rosin Investment. These 5% became the stumbling block, as they are more than the stocks of all other small shareholders, which own just 4.42% of Balkanapharma-Troyan. By the proposed amendments to the POSE law-makers practically leave the future of Balkanpharma Holding and the projected merger in the hands of Rosin Investment. Its representatives have already hinted they would not agree to get only BGL5.04 per share (as was the price of Balkanpharma's tender offer before the SSEC rejected it). So, Balkanpharma-Troyan's writting-off the register of public companies will depend on a future agreement between the holding and Rosin Investment.Balkanpharma's intentions cannot be opposed by any of the shareholders in the Dounitsa-based enterprise, as 95.21% of the stocks are owned by the holding. A number of the other shareholders are not likely to hear about the tender offer, and those who know about it will be certainly not satisfied with the offered price of BGL5.38 per share. Thus, the possibility for writing off the Doupnitsa-based enterprise from SSEC's register of public companies is not great either.

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