Банкеръ Weekly



For several months now MPs and agricultural experts have been pondering over the issue how to save Kabiyuk - the oldest Bulgarian stud farm near Shoumen - from the financial collapse it fell into during the 2000-2002 period after its transformation into a state-owned commercial company (registered in the Shoumen Regional Court on April 5, 2000). Valuable plants are grown in it and pedigree horses of Arabian, English and Eastbulgarian breed, as well as sheep and cattle from the national gene fund are raised there. The Museum of the Horse (unique of its kind in Bulgaria) and the authentic summer residence of King Alexander Batenberg are located in the complex. Therefore, Kabiyuk is on the list of companies which are not liable to privatisation. According to data of the Directorate for Management of Property and Commercial Companies with State Participation with the Ministry of Agriculture and Forestry, in September 2003 the unserviced public liabilities of Kabiyuk amounted to BGN1.57MN, of which BGN929,000 to the National Insurance Institute (NII) and BGN641,000 to the Regional Taxation Directorate of Shoumen. In the end of the first nine months its profit was BGN1,000 and its short-term debts totalled BGN2,543. For that reason the stud farm was included in the group of enterprises, monitored by the Finance Ministry. Under Council of Ministers' Ordinance No 147 of July 5,1999, they are not allowed to draw bank credits and operate in compliance with special rehabilitation programmes, including measures for restriction of expenses and reduction of liabilities. Such a programme was worked out for Kabiyuk back in 2002. It projected deferred repayment of its public liabilities within ten years after a 1-year grace period. It also included a proposal to the Finance Minister Milen Velchev that Kabiyuk should use a temporary financial aid of BGN400,000 and an increase of the subsidy from the Agriculture Fund, earmarked for feeding the animals from the national gene fund, from BGN100,000 to BGN300,000. The rehabilitation programme reads that Kabiyuk needs an investment credit for the purchase of agricultural equipment, fuels and lubricants. However, in July 2003 the programme had to be revised due to the enforcement of the new Social Insurance Code, stipulating that liabilities to the NII exceeding BGN100,000 could be rescheduled for no more than three years. Thus, the approval of the programme was postponed. According to the MP from the NMSII Yuliana Docheva, the rehabilitation programme will not solve all the problems of the unique stud farm. In her opinion, there are two other options for saving the state-run company. One of them is to extend to it a loan with a state guarantee. But that possibility has been rejected by both the Agriculture and the Finance Ministry. The other option is that the farm is granted a special statute, allowing the drafting of regulations for extending credits to it according to a special scheme. This is presently being discussed in the Parliamentary Commission on Agriculture and Forestry. If the commission approves that possibility, the new statute of Kabiyuk will be included in the Act on Stock-breeding, amendments to which were passed on first hearing in February 2003. According to lawyers, however, article 62, item 3 of the Commercial Code provides the optimal opportunity. It allows the establishment of a state-owned enterprise that is not a commercial company.The aim is to set up a structure that will ensure legal bases for preserving the complex that is not liable to divestment by law, Ms. Doncheva said in front of the BANKER weekly. Regretfully, we were not supported by the Agriculture Ministry. Ultimately, an expert panel was set up with the participation of the Deputy Minister of Agriculture Nihat Kabil, which should file within a few days its proposal for the new statute of the stud farm. The latter is to be discussed by the Parliamentary Commission on Agriculture and Forestry. Mr. Kabil, on his part, explained to a reporter of the BANKER, that he would support any reasonable proposal for saving Kabiyuk. And the experts from the Directorate for Management of Property and Commercial Companies with State Participation with the Ministry of Agriculture believe that the radical solution in this case is to apply the scheme, used for the Bulgarian State Railways (BDZ), i.e. to write off the company's public liabilities by a special law and increase by their amount the equity capital of Kabiyuk EAD.

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