SALE OF ADIS HAS FAILED
COMPANY REMAINS UNDER THE STATE'S CONTROLADIS (the acronym in Bulgarian for Domestic Diplomatic Estates Agency) left the privatisation market on October 13. The tender for the sale of 100% of the capital of the former Bureau for Servicing Dimplomatic Estates) was invited on May 29, 2003. September 23 was the deadline for submission of final offers. By then bids were filed by four companies: the Italian Gruppo Miroglio, the Czech Property Investments, the American Realty Investors Inc., and the Israeli BCR Europe Ltd.The offered purchase price was the only criterion for estimating the bids of candidate-buyers. The Italians offered the highest price - BGN96MN. The Czech company came next with BGN78,255,000, followed by the US company - BGN76MN and BCR Europe Ltd. - BGN61,555,555.The official reason for the suspended divestment procedure was that the Italian company had failed to submit to the Privatisation Agency (PA) a written declaration that it agreed with the competition terms. Under the Ordinance on Tenders and Competitions, the lack of such a document deprives the bidder from participation. And the prices offered by the other bidders, according to the PA, were lower than the estimated market value of BGN83.4MN. As the new ordinance does not stipulate opportunities for improvement of the bids, the only possibility that remains is for the sale procedure to be suspended by the PA.According to many businessmen and experts, the failure of the divestment of ADIS was underlying in the terms, set by the PA. Only investors with at least 3 years of experience in the management of real estates were admitted to the tender. The other requirement was that they should had received proceeds exceeding EUR10MN from such activities in 2002 or to had been running real estates worth at least EUR60MN. Candidates managing estates with a total area over 100,000 sq. m also could participate. Still when the sale procedure was invited, players on the real estate market expressed their opinion that a Bulgarian company would hardly satify these conditions. Yet, one Bulgarian participant - Trakiya Trade Centre (a subsidiary to Napredak Holding) was admitted to the final stage of the tender. However, it withdrew from the competition before the final and the reasons for that were not made public. Another serious candidate, considered to be one of the favourites - the British Gort Securities - also gave up the competition. Its representatives explained that irrational abundance reigns on the Bulgarian real estates market. The greatest suspicions that the convenient candidate has turned up and the deal will be closed (though after long legal disputes) were caused by the information that Miroglio would pay by clearing Bulgaria's debt to the Italian Agency for Export Credits (SACE), in compliance with a bilateral agreement, that is in force till January 2, 2005. Rumours spread that the court protests on the part of the other bidders against that privilege, granted to Miroglio, forced the PA to cancel the sale procedure. However, a representative of the Czech company told the BANKER weekly that it would hardly initiate legal proceedings as chances of success were scarce and the deposited BGN5MN would remain distrained till the end of the lawsuit. One way or the other, the suspension of the procedure for the divestment of ADIS was not much of a surprise. It turned out that the reason was a technical mistake of the part of Miroglio, due to which ADIS remained under the control of the Foreign Ministry. According to an inofficial source, however, the real obstacle to the sale of ADIS was the Foreign Minister Solomon Passy, who was reluctant to part with the lucrative company. The Ministry of Foreign Affairs has directly intervened in the privatisation, taking part in the drafting of protective schemes for the foreign and Bulgarian renters of ADIS estates. It was proposed that within five years the buyer should not be allowed to effect deals in real estates rented by diplomatic missions and consulates or to unilaterally change the already signed contracts for rentals.According to one of the candidate-buyers of ADIS, a new privatisation procedure will not be probably opened within six months as this is not to the interest of the Bulgarian Foreign Ministry. PA's press attache Anna Rouscheva also said it was not yet known if and when a new tender would be invited.