Банкеръ Weekly



AKB Fores is the new negotiator for a 75% stake in the company that will be managing the assets of the Varna Shipyard. The balance of 25% remain in the hands of its present owner, Navigation Maritime Bulgare (Navibulgar). The first participant - Baker Investments Corp. - with which the especially established commission with the Transport Ministry was holding negotiations, withdrew from the deal on June 27.According to rumours, the withdrawal of Baker Investments was due to some of thе requirements, set by the Transport Ministry to the future owner of the Varna Shipyard's assets. For example, the offshore company's managers did not agree to block at the Central Depositary 26% of the majority 75% package, offered for sale. The idea is that in case of non-fulfullment of the undertaken commitments on the part of the buyer (i.e. to realize a turnover of USD120MN from the shipyard's core operations within three years) the blocked shares would be returned to the hands of the other owner, Navibulgar. Baker Investments also wanted to reduce the purchase price of BGN18.7MN, which it had offered initially. However, both offers are way down from the minimum purchase price of BGN25MN, required by the Transport Ministry. Whatever the reason for the offshore company's withdrawal from the competition, if the sellers follow their statements from a month ago AKB Fores goes back to the track. The state-run Iranian Shipping is still a partner in this tender of the company, headed by Nikolay Banev. AKB's Executive Director Ivailo Marinov said that representatives of the Iranian firm visited Bulgaria two weeks ago on that occasion. In his words, AKB Fores and its partner from the Middle East did not have any hesitations regarding the implementation of requirements for setting up a joint venture with Navibulgar. According to experts in the branch, however, even if AKB Fores reaches an agreement with the commission, the deal could be stopped by the State, embodied by the Privatisation Agency (PA) with the argument that the holding company is indebted to the Treasury. Lawsuits about these liabilities are still going on. Some of them are at the Supreme Court of Cassation and have not been completed yet. If the deal is blocked, the procedure for the sale of the Varna Shipyard will probably start from the beginning again. In fact, as the BANKER weekly has already written, the company's majority shareholder, that will be managing the shipyard's assets, undertakes the risk of not knowing which its real partner will be, because Navibulgar is to be privatized. According to Vladimir Penkov, one of the owners of Lega Interconsult - a legal firm which is a consultant on the deal - Navibulgar's divestment would be finalized by March 2004 at the latest. This term cannot be at all comforting. The legal firm in consortium with PriceWaterhouseCoopers has won the tender for a privatisation intermediary and consultant in the privatisation of Navibulgar and Bulgarian River Shipping. The consultants have already conducted due diligence of the two state-run shipping companies and have prepared an information memorandum. A strategy for the divestiture of the two companies has been drafted as wll, but Mr. Penkov declined to reveal any details, as it should be first approved by the Council of Ministers. Afterwards, the strategy will be moved for consideration by Parliament. Lega Interconsult availed itself of the meeting of members of the Association of Independent Legal Firms, Lex Mundi, in London, to present the two shipping companies to the British business. Mr. Penkov says they have attracted interest. It turns out there would be the least uncertainties if a common buyer for Navibulgar and the Varna Shipyard could be found. AKB's head Ivailo Marinov told a reporter of the BANKER weekly it was still too early to say if the corporation would take part in such a competition. However, he did not rule out such a possibility.
The completion of Navibulgar's cash privatisation will influence the sale of the residual state-owned share against compensation instruments of payment on the stock exchange. Navibulgar has been included in the so-called Dream pool, together with packages in the following companies: Bulgartabac Holding - 12.8% (the stake has already been sold out), the State Insurance Company (DZI) - 20%, the Bulgarian Telecommunications Company (BTC) - 20%, Petrol and Gas Prospecting and Extraction - 49 per cent. A 30% stake of Navibulgar will be offered for sale against non-cash instruments of payment on the stock exchange. According to projections of the investment broker (a consortium between Bulbrokers, UBB, and National Bank of Greece) this should be done in the autumn. Despite the hopes that the companies within that pool could attract the attention of foreign investors, no such have turned up so far.

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