Банкеръ Weekly

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BULGARIA RIVER SHIPPING SAILS TO PRIVATISATION

Candidates to buy 626,783 shares, representing 70% of the capital of Bulgarian River Shipping, will become known on April 25, the deadline for submitting preliminary offers. On March 22, a day after the company celebrated its 70th anniversary, the Privatisation Agency (PA) invited a public tender for the divestment of that package.The tender will be held in two stages, in which both strategic and financial investors can participate. Tender dossiers may be purchased by April 8. Only companies registered in Bulgaria or in a member country of the European Union (EU) are entitled to bid in the competition. Offshore companies shall not be allowed to take part in the tender. Financial investors are required to have proceeds from transport and logistics services exceeding EUR30MN for the last three fiscal years. They will have to prove as well that in the same period they had processed cargoes of at least 2,000,000 tons. Companies managing financial assets and owning shares over EUR50MN in the last year will be admitted to bid as well. Candidates which meet these requirements, having purchased an information memorandum, will get a certificate for registration. It will allow them to file a preliminary offer, to be evaluated according to three criteria: price, investments and number of working positions. The offered purchase price will weigh the most in assessing the bid, bringing 70 points. Each of the other two criteria will bring 15 points. Candidate-buyers, admitted to the second stage of the contest, should present a binding offer (with a price) and a 5-year business programme containing commitments for working positions and investments. The candidate should also prove the origin of the money for the purchase of the company's majority package and for the projected investments. The strategy for the divestment of Bulgarian River Shipping, approved by the National Assembly on March 1, stipulates that the potential buyer should set aside as an effective bank guarantee 10% of the investments projected in the business plan. It should also block part of the acquired shares as a special pledge, guaranteeing the fulfilment of undertaken commitments. Some of them are that the new owner should not reduce the participation in the company below 51% within a period of three years, to maintain its line of activity, and not change the vessels' Bulgarian flag within five years. The exact amount of the shares on which the special pledge will be constituted, will be specified in the privatisation contract. According to the PA Executive Director Atanas Bangachev, four or five companies will take part in the competition. A Bulgarian financial investor is very likely to be among them. Experts comment that the requirements to the strategic buyers are onerous to be met by domestic firms. Several European and American companies are expected to take part in the contest. Announcements for the privatisation of Bulgarian River Shipping were placed last week in Lloyds and in Financial Times.Just a year ago (on March 23, 2004) the minority 30% package of the capital of Bulgarian River Shipping was sold on the stock exchange against BGN11MN, payable in compensation instruments. The average price of the shares sold then was BGN41.25/apiece (in compensation instruments) or almost BGN10/apiece in cash. Two months later that share was bought out by Alfa Finance Holding. The capital of Bulgarian River Shipping is BGN895,404. The company's operation includes transportation of cargoes, passengers and cars. It has 18 self-propelled ships and 122 towed vessels of 178,937 GRT. The domestic river fleet ships 25% of the cargoes coming into the country and going out of it. Last year their aggregate volume reached 1,700,000 tons, 38.3% up from 2003. The fleet's occupation rate was 77%, up from 69.4% a year earlier. According to the non-consolidated operative report of Bulgarian River Shipping, proceeds from the company's operation in 2004 amounted to BGN24.8MN, up from BGN16.6MN in 2003. Most of the proceeds -BGN17,234 - came from transportation services, which reported a 66% growth from the previous year. The company's net profit totalled BGN325,000 in 2004, up from BGN296,000 in 2003.

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