Банкеръ Weekly



The disputes regarding the privatisation deal on the Sandanska Bistritsa cascade, which have been going on for more than a year, suddenly took a turn. On March 8 the Official Gazette published an announcement of the Privatisation Agency (PA), revoking the decision of its former management to cancel the divestment procedures for the three hydroelectric power plants. On Thursday (March 14) PA's Supervisory Board approved the draft agreement for the sale of the hydroelectric power plants to the Czech company Energo pro for USD33,057,000. The only thing that remains to be done now is for the contarct to be signed by PA' Executive Director Apostol Apostolov, which according to well-informed sources is a matter of days. The interesting point is that just a week ago the feelings regarding the deal on Sandanska Bistritsa were quite different. After in November 2001 a 3-member team of the Supreme Administration Court (SAC) backed the Czech side when litigating the cancelled sale, the PA officially announced its stance that it would litigate the magistrates' ruling. However, it turned out that while all expected that a date would be fixed for hearing the lawsuit on the claim from a 5-member team of the SAC, the PA had held several rounds of negotiations with Energo pro and with their mediator in the deal, BBG Simex, for specifying some details of the contract.When we saw a constructive attitude on the part of the PA, we decided it's needless to cause a stir, Ivan Genchev, Manager of BBG Simex, explained to the BANKER weekly.After the negotiations, an agreement was reached for reinstating the rights of Energo pro as an exclusive buyer of Sandanska Bistritsa. The two teams had to clear some outdated provisions in the contract and the signature under it, put by PA's former executive director Zahari Zhelyazkov in 2000. In the spring of 2001 the PA (headed then by Levon Hampartsumyan), cancelled the deal on Sandanska Bistritsa with the motive that no strategy for privatisation in power engineering had been worked out. Rumours circulated that the decision was made after the Czech company yielded to the pressure to give up the purchase of the cascade in favour of another candidate, say Grisha Ganchev's Litex Commerce. However, after the PA was headed by Apostol Apostolov, procedures for the sale of several dozens of hydroelectric power plants were opened.Among the inofficial motives from last spring was the one that the price of the deal on the three hydroelectric power plants of the Sandanska Bistritsa cascade - USD33,057,000 - was too low. Such stands were based on the then efficient stipulation of the Louchnikov act, under which 90% of the price of all closed pivatisation contracts could be paid in compensation bonds. In that case, and having in mind that the market value of compensatory bonds was about 20% of their par value, the Czech company would have to pay no more than USD10MN.The present situation is quite different. As of the beginning of 2002 the above-mentions provision in the Louchnikov act is not valid and Energo pro should pay not 90 per cent, but only half of the purchase price in all allowed instruments of payment, including compensatory bonds, whose issuance is regulated by the Land Tenure Act. On the other hand, Ivan Genchev pointed out that Energo pro would lay no claims to the PA for inflicted damages due to the delay of the deal on the sale of the hydroelectric power plants. This means that the price will remaien unchanged. In other words, if the deal becomes a fact, about USD16.5MN will be paid in cash, and the other half - in compensation instruments. The average price of the agricultural bonds is currently 13% of their par value. Thus, the real expenses of the Czech company will total USD18.6MN-plus. It is logical for Energo pro to prefer to effect the payment in such instruments, simply because they are considerably cheaper than the other payment instruments in privatisation deals - compensation notes.

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