Банкеръ Weekly



The biggest privatisation deal in Bulgaria is on its way to a successful conclusion - within the terms fixed and without the slightest scandal. On September 28, the Privatisation Agency (PA) signed a draft agreement for the sale of the third and last (Southeast Bulgaria) pool to the Austrian EVN company. In return to EUR271MN, the Austrians will take control over 67% of the electricity distribution companies in Plovdiv and Stara Zagora. Draft agreements with the other two buyers chosen - the German E.ON (for the Northeast Bulgaria pool including the companies in Pleven and Varna) and the Czech CEZ (for the Western Bulgaria pool), were signed earlier in September. The sale of the seven electricity distribution companies will add EUR693.2MN to the treasury. Moreover, the Government will be able to boast of having attracted three big and authoritative European companies. As far as the four and a half million electricity consumers are concerned, they are preparing themselves for quality services and... higher charges.The documents signed with the three companies must get approval from the PA supervisors. Then they will be presented to the Council of Ministers. Apart from a decision of the Government, the finalisation of the deals will also need permission from the Commission for the Protection of Competition. The German and the Czech companies, together with the PA, already asked for its opinion. The Austrians are expected to do the same within a few days. If the Commission for the Protection of Competition observes the requirements of the law and announces a decision within one month, the three sales can be concluded before the end of October. In this case, the foreign investors will be able to enter the companies they have bought by year-end.The three sets of privatisation documents are quite similar, the BANKER weekly learned from the team who led the negotiations. They only differ in the companies sold and a few small details. The main clauses are one and the same, however. On the day the deals are finally signed, at least 20% of the price should have been transferred to a special account. The ownership of the shares sold will be transferred after the whole amount is paid. The three buyers will not be allowed to sell the acquired stakes before December 31, 2008.Twenty per cent of the price paid will remain in another account for eighteen months following the final transfer of the ownership rights in order to guarantee to the buyer that the companies bought have no hidden liabilities (such as unpaid tax and customs duties or debts to suppliers). At the end of the 18-month period the account will be unblocked and the state will receive all the money in it.If the transfer of ownership is concluded by next April 30, the 2004 and 2005 dividends will be divided between the buyer and the state in accordance with their stakes in the company at the time its profit is distributed. In case any of the companies raises its capital by December 31, 2008 and the state fails to profit from its right to acquire its legal part of the newly-issued shares (33%), the buyer is obliged to pay a premium for the reduction of its shareholding percentage.

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