CHIMCO MAY AVOID BANKRUPTCY
The Vratsa Regional Court postponed for November 11 the insolvency case against the Chimco fertilizer manufacturer. The reason is an illness of one of the three experts in the case, Penka Alexandrova, chairing the jury, said.The delay will allow Chimco's mysterious new owner to initiate negotiations with the National Electricity Company (NEC) and Bulgargas for rescheduling the plant's debts. If the owner comes to an agreement with the two state-owned monopolists, they might withdraw their claims and save Chimco from insolvency. It became clear at the beginning of last week that an American investment fund had acquired the Cypriot offshore companies IVST Trading and Jack Oil Ltd, which in turn own 37% and 34% stakes in Chimco. In practice, the fund took control over 71% of the plant's capital. EIBANK is brokering the deal. The only announcement Chimco's press office made was that the US investment company had experience in managing assets of the chemical industry and energy, but refused to say its name. It will become known when it is written in the shareholders' book kept by the Central Depository. Then the fund will be obliged to make a tender offer to the Chimco small shareholders. According to the Public Offering of Securities Act, a shareholder who acquires over 67% of the capital of a company is obliged to propose the rest of the shareholders to buy their stakes. The new Chairman of Chimco's Supervisory Board Nikolay Velkov told the BANKER weekly that the fund would fragment its stake in the plant through block deals on the stock exchange. Part of the shares will probably be transferred to related entities. That will help for avoiding the need to make a tender offer. According to Mr. Velkov, it is not logical for the priorities of an investment fund to include writing a company off the public register.The Americans are ambitious to recover the ammonia and carbamide production of the plant by year-end. Initially, they intend to invest USD40MN as well as pay off the plant's debts to NEC and Bulgargas totalling BGN143MN. That promise has been given incessantly for the past two years and only a change in the management of the enterprise will give hope they may be kept.The changes were made during a meeting of the Managing Board of the company on October 15. The new managerial team includes a number of people occupied in the banking system. The new head of the Supervisory Board is Nikolay Velkov who is also Deputy Chairman of the supervising body of Corporate Commercial Bank. Krassimir Draganov who is doctor in economics and expert in corporate finance was appointed Chairman of the Managing Board. Mr. Draganov has also been chairman of the Boards of Directors of Chimimport AD and Interpred World Trade Centre AD. Moreover, he has been chief financial consultant in the privatisation of Agropolychim AD, Izoma AD, Riviera AD, Elenite AD, Sandansky AD, Samokov-Borovets AD, Old Plovdiv AD, etc. Stanislav Derlipansky, former member of EIBANK's Managing Board in 2001-2002, became Draganov's deputy. Andrey Semerdzhiev retained his position as Executive Director.The stock exchange was informed about the changes that sent the Chimco shares up to BGN0.80/piece from BGN0.22/piece. The stock exchange was forced to suspend their trading at least by the end of that day. The market had the same reaction when the news about the tobacco companies privatisation was made public.The controlling 57% stake of Chimco's capital was sold to the US IBE Trans of New York for BGN1MN on July 23, 1999. Later, as a result of two transactions made in 2000 without the awareness of the buyer, IBE Trade, the stake was sold to the Cypriot offshore companies IVST Trading and Jack Oil Ltd. That deal took place in a period when the privatisation agreement forbids the buyer to sell 51% of the capital of the plant. The Agency for Post Privatisation Control was put in a delicate situation, because it did not know who should pay damages - the buyer who failed to fulfil its commitments, or the offshore companies that acquired the shares without Chimco managers' awareness.