BULGARTABAC TO BE SPLIT IN TWO COMPANIES
Bulgartabac's splitting in two separate companies, including the production of cigarettes and the tobacco processing enterprises, is being prepared, people close to the Movement for Rights and Freedoms (MRF) claim. This is an elegant way to ensure influence and property to the most powerful people in the MRF. The splitting will be probably made according to a geographical principle. When the obligatory structural reform begins it will turn out that only two of the cigarette factories - those in Blagoevgrad and Sofia - are able to produce the necessary quantities for the domestic market and can survive in real market competition. The others have considerable debts and an eventual rehabilitation programme would mean cutting down of production units. A serious investor and high price will be sought for the two factories as for the cigarette factory in Nis, Serbia. Thus, more than the EUR110MN, presently offered for the entire holding, could be received. The situation in tobacco-processing is different - it includes the processing workshops and the individual companies, which process the purchased tobacco and prepare it for the production of cigarettes or for export. Currently, eight of all the nine cigarette factories have processing facilities of their own, which will become independent under the new scheme. MRF's interests are directed to them. A similar approach as to the cigarette factories will be applied in approving rehabilitation programmes for these companies. Some of them will be closed down, and the best of them, with the greatest production capacities, will remain operating and will be privatized. As the big players in the purchase of tobacco - Sokotab, Mihailidis and Austria Tabac, have their own processing facilities, the interest to those of Bulgartabac will be low and their price won't be high. Thus, they will remain in MRF's hands. They will be in the advantageous position of supplying domestic cigarette factories with processed tobacco and will have the opportunity to effect export through Bulgartabac's channels, e.g. the Egyptian Tobacco Monopoly, which has been purchasing tobacco from the holding for years. It is known that MRF's electorate consists mainly of tobacco-growers. Thus, the MRF will have one more benefit - it will keep the people in control by purchasing their tobacco output.