Банкеръ Weekly



It seems that the drama regarding the list of liabilities of the non-ferrous metals works (KOZM) near the Iskar railway station will soon end. The general meeting of the company's creditors, held on February 20, appointed Tsvetan Bankov and Violeta Manolova permanent trustees in bankruptcy. The date when insolvency procedures started is still disputed. Mr. Bankov and Ms. Manolova are also trustees in bankruptcy of the Pernik-based Stomana and were temporary fulfilling the duties of KOZM's former trustee in bankruptcy Anna Milenkova after her removal.The change became possible after the company K K Commerce was deleted from the list of KOZM's creditors, because under the privatisation contract Tzvetelin Kunchev's firm Bulmetal had to service K K Commerce's receivables, totaling BGN27MN. Most of this amount has been accrued from due interest and the principal is about BGN7MN. Thus, KOZM's liabilities were reduced from BGN30MN to BGN3MN, chiefly due to Umicore Med (the Pirdop-based copper smelter), to the security firm Atlas (which still guards the enterprise's property) and to the former workers. KOZM's assets include only spare parts and several machines, as well as the rest homes in the Vitosha mountain and in Panichishte. The core production is not anymore owned by the enterprise.
The more interesting part of the company's insolvency precedures regards the agrument about it initial date. According to a ruling of the Vratsa Regional Court (KOZM's last registration was in Vratsa), the bankruptcy procedures against the company began on January 12, 1999. This means that the deal, effected in the end of the same year, between the International Bank for Trade and Development (IBTD) and the Belgian company Unicore (which possess a mortgage on KOZM's main production capacities) and the buyer of assets - Sofia Med (controlled by the Greek metallurgical group Viohalko) will be invalidated as it was closed after the date when insolvency procedures against KOZM had begun. In that case Sofia Med's ownership rights on KOZM should be revoked. But then one of the few big foreign investments in Bulgaria will be stopped, at that without any fault on the part of the investor. Halkor (a subsidiary of Viohalko) and Belgium's Umicore (which are the major shareholders in Sofia Med) bid in a public tender for the sale of property, pledged in favour of the IBTD and Umicore, and were the only candidates. Thus, Sofia Med became the owner of KOZM's main assets against an obligation to repay the enterprise's liabilities of USD3MN. In addition, the buyers began fulfilling an investment programme worth about EUR110MN, without having undertaken such a commitment. There are not many investors such as Viohalko (which has already made substantial investments in Stomana Industry and in the Sofia-based plant for aluminium angles) in Bulgarian business. But they might be driven away by unwise court decisions.KOZM's creditors are now litigating the date (January 12, 1999) when insolvency procedures against the enterprise began. The magistrates have scheduled a hearing of the case for the beginning of March. The Greeks hope the problem will be quickly solved, because it hampers them in proceeding with the realization of their investment programme.More than EUR20MN has been invested in Sofia Med so far, Anton Petrov, a member of the company's Board of Directors informed the BANKER weekly. Production of brass was resumed thanks to this investment and the output reached 9,000 tons last year. A double increase of the output, without any additional investments, is projected for 2002. Another EUR88MN (for resuming the production of rolled metals) is to be invested in the enterprise under the programme for the development of Sofia Med. Thus, the works' annual output will reach 120,000 tons. At the present stage, however, the project has been frozen due to the unfavourable decision regarding the date when insolvency procedures started.Ninety per cent of Sofia Med is held by Viohalko's subsidiary Halkor and the balance of 10% is in the hands of Umicore (the former Union Miniere). The Belgian company is one of the major suppliers (to KOZM formerly, and to Sofia Med at present). Therefore, the corporation's interest in the expansion of copper processing is significant, as it would sell its output on the local market, at lower transport costs. Viohalko, on its part, has specialized in the purchase of ferrous metals scrap for the needs of its Pernik-based enterprise (the former Stomana) and has recently joined the copper scrap business. Therefore, the operation of a big plant, such as Sofia Med is, is in line with the strategies of both companies.

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