Банкеръ Weekly



Under an optimistic forecast, the state-owned company Balkan Air Tour will be privatised by June 23, 2003. Back in November, 2002, the Transport Ministry announced that Dutch, German, Italian and Kuwaiti investors had expressed interest in the newly-established air-carrier.The pessimistic forecast, however, places this privatisation in the far distant future. Experts from the industry put in doubt the information that some potential investor from the Middle East might appear interested in acquiring aviation business in the eve of the war against Iraq. But according to Transport Ministry insiders, Balkan Air Tour is presently interested exactly in investors from that region, which might be willing to enter the liberalized European market. Yet there are not so many foreign air companies with sufficient free aircraft, in need of guaranteed flights which could be provided by the Bulgarian national carrier.In the meantime, on Wednesday (March 12) the Privatisation Agency (PA) presented a project about Balkan Air Tour's privatisation strategy. A public two-stage competition is to be invited. The document has been prepared by PA experts and is to be moved to the Ministry of Economy and the Transport Ministry for consideration. Later on the strategy must be approved by the Cabinet and Parliament. Balkan Air Tour was included in the list of the 15 companies to be sold by decision of the Cabinet under the recent amendments to the Privatisation Act. These companies are not subjects to court control.The strategic plan tries to push forward the idea that Balkan Air Tour must be privatised as quickly as possible. The future investor, on the other hand, must be financially stable and present a business plan for the development of the national air-carrier in the next five years. The delay of the privatisation of many big Bulgarian companies like BTC, Chimco AD, Incoms-Telecom Holding AD, Balkankar Holding EAD led to a drop in investors' interest and shortage of expected considerable revenues to the budget, PA officials explain.Investors will be offered to buy shares up to no less than 51% of the capital. The strategy itself reads that the eventual buyers will appear far less interested if only a minority stake of the carrier is offered for sale. After the sale of the majority stake, 25% of the shares of Balkan Air Tour will be put up for sale on the Bulgarian Stock Exchange - Sofia.According to the preliminary plan, strategic investors from the aviation branch, financial groups, and consortiums between strategic and financial investors, can participate in the competition. The requirement for financial stability of the strategic investors is that they must have revenues up to EUR100MN for the last three years of their activity. The financial institutions, on the other hand, must manage funds exceeding EUR200MN. In their initial offers the candidates must pinpoint the size of the stake they are willing to buy, specify the price, and present a detailed business programme for the next five years after the date of the acquisition. Only those investors which have proved they come up to the above requirements will receive Balkan Air Tour's information memorandum and will be able to carry out limited legal and financial analyses of their own of the state of the company. They will also be able to file offers. Those investors will have to specify the employment level and the period of time within which it will be preserved.The strategic plan foresees the State's right of veto in cases when the core activity of Balkan Air Tour is changed, the company's location is moved, or a decision for its winding-up is made. No representative of the State, however, will be allowed to participate in the management body of Balkan Air Tour.But the air-carrier is now as miserably poor as Cinderella from the fairy tale. Its capital amounts to BGN30,160,000, distributed in 30,160 shares, each of BGN1,000 par value. The deposited capital is BGN7.66MN and the rest of it, amounting to BGN22.2MN, must be deposited within two years. If the Transport Ministry fails to do it, then this liability will be written in the privatisation agreement with the future buyer. Afer the State gets acquainted with the candidate-buyers' initial offers, it will specify the size of Balkan Air Tour's capital in the last stage of the competition.In end-2002 the Transport Ministry planned to sell 49% of the assets of the newly established air-carrier and preserve the Bulgarian stake of 51 per cent. Back then there were criticisms that a nationalization of a losing private company was being attempted. Balkan Air Tour reported losses of USD500,000 in December, 2002 alone.

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