Банкеръ Weekly

Briefs

CHIMCO - FIVE MINUTES BEFORE THE END

The beginning of Chimco's end is already a fact. The chemical works stopped operations. This time, however, its is not a question of when the enterprise near Vratzawill begin to produce fertilizers again. The big problem is if it will ever be recommissioned. According to Chimco's Executive Director Nikolay Vuzev, the enterprise would resume operations in at least six months, or perhaps a year. In order to be recommissioned, the fertilizer manufacturer should pay off all its liabilities to the budget, to the National Insurance Institute (NII), and the National Healthcare Insurance Fund (NHIF), as well as pay the overdue wages to its workers. Ina ddition, the works should also sign schedules for deferred payment of its debts to Bulgargas, totalling BGN70MN, and to the National Electricity Company (NEC), amounting to BGN33MN. Meanwhile, funds should be ensured for advance payment of electricity and natural gas. Current expenses are to be paid on time as well. This means that an economic miracle should happen there. We are officially decommissioning the enterprise in order to legalize its actual state, Mr. Vuzev said in front of the BANKER weekly. The chemical manufacturer has been practically idle since August 2002. The reasons, according to the company's managerial team, is the high price fo natural gas and the lack of protective customs duties for carbamide. And the dismissal of a large number of employees was, according to Mr. Vuzev, a part of the plan for saving the chemical company.It did not become clear exactly when this innovatory method would save the enterprise. It only became known that the owners will economize from the expenses for labour remuneration, amounting to some BGN150,000 per month. Only 350 employees will remain at work, who will attend to the installations. Chimco's managers promise to take care about the sacked workers. The enterprise will give them an opportunity to attend additional training courses, and afterwards the could go to work at fertilizer manufacturing enterprises in Nigeria or the United Arab Emirates, at that not only as rank and file workers, but as experts...Opportunities for a new future of the enterprise enar Vratza are actively being sought, Mr. Vuzev explaned, adding that a joint project with Agropolychim would be discussed. Similar joint projects with the Devnya-based fertilizer works have been implemented several times, branch insiders recall. According to them, most of the orders, fulfilled by Chimco after the year 2000, are under the so-called processing schemes with Agropolychim. The Devnya-based enterprise covers all bills for natural gas, pays for Chimco's productions, and ensures a market for the entire output. And according to the accounting reports for the last two eyars, all that is done with a profit, despite the high prices of natural gas, of which Chimco's managers complain. In fact, they have paid regularly to their employees so far, although only the minimum salary, the Executive Director claims. Despite the fact the the enterprise has not produced any output and its proceeds have shrunk since March, 2002, the insurance installments for that epriod hav been calculated, although they have not been remitted to teh NII yet. In an interview the CEO of NII's Insurance Payments Department Daniela Assenova said that Chimco owed almost BGN1.2MN to NII at end-2001. This amount will be compulsively collected by the State Receivables Agency. According to Ms. Assenova, Chimco did not pay any remunerations throughout 2002, and therefore no insurance installments were remitted. As a proof of the managemnet's serious intentions to find a way out of the crisis and recommission the enterprise, Mr. Vuzev points out the fact that the isntallations have been preserved. Only part of them, which have never been in operation and were not neecssary for the normal production process, were turned into scrap.The lawsuits for adjudicating Chimco insolvent, initiated by Bulgargas and NEC, are alerady in the Court of Appeal. The NEC moved its claim to teh Vratza Regional Court on November 27, 2002, and a week later Bulgargas did the same. Due to the counter claims, laid by Chimco's management to NEC (fees amounting to BGN123MN for using Chimco's electricity transiting facilities), the court has not proceeded with these lawsuits. According to effective legislation, however, no term has been fixed for the Court of Appeal to extend a ruling on the cases.The lawsuit regarding Chimco's ownership, instituted by the US company IBE Trade, was adjourned for a consecutive time. It will be heard again on June 16, 2003. The US company seeks its rights on Chimco's majority package of shares. The enetrprise is presently owned by the Cypriot offshore firms ABCT Trading and Jugoil Ltd.

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