Банкеръ Weekly



A new procedure for the sale of the State Insurance Institute (DZI) will be opened in end-February, experts of the Privatisation Agency (PA) announced. The second evaluation of the company, worked out by Deloitte Touche, has already been moved to the PA. By the end of next week PA's experts should submit their remarks, if they have any.The auditors Deloitte Touche had previously evaluated DZI's total assets at USD35MN. Even then financial circles commented that this is a very low price for the state insurer. According to information, which has not been officially confirmed, the new evaluation of DZI's assets is USD45MN.Pundits do not expect a delay of the privatisation procedure this time as the Cabinet is said to have insisted for a completion of the state insurer's sale as soon as possible. The final term, set inofficially by the Government, is the year-end. One of the motives is that the almost two-year long drama regarding DZI's has been seriously impeding the company's operation.The previous negotiations for DZI's privatisation with the only candidate buyer - the consortium between the Israeli company TBI and the MEBO DZI 2000 - were brought to naught in the end of 2001 after the consortium did not agree to pay USD20.5MN in cash for 67% of the company's capital. The candidate purchaser had offered a debt-for-equity swap, repaying part of Bulgaria's liabilities to SACE, the Italian Agency for Export Insurance.The stumbling blocksThe haste for opening a new privatisation procedure has other motives as well: potential investors will be presented data for the company, based on its fiscal report for 2000, i.e. dating more than a year ago. The present evaluation made by Deloitte Touche is also based on these data.DZI's consolidated balance sheet for 2002 will be ready in end-March at the earliest. If the insurer's divestment is delayed, the evaluation should be updated in accordance with its new financial report. Thus, the privatisation procedure should be postponed further.The privatisation schemeIn end-January PA's Chairman Apostol Apostolov announced in front of mass media that between 70% and 80% of DZI's assets would be put up for sale. Pundits said that some 20-30% of the company's capital would be offered on the stock exchange. The State will probably keep a golden share in DZI in order to control the operation of the eventual buyer.The other option is to assign the company's management to a competent company (while the previous privatisation procedure for DZI's sale was going on the BANKER weekly several times wrote that negotiations to that end were being held with the Pan-european insurer Eureco) for a year, and it will be give a chance to buy DZI after that.After the first privatisation procedure failed, two Italian and one US company showed interest towards DZI, PA's experts announced. According to them, however, they cannot be regarded as serious potential buyers yet.

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