Банкеръ Weekly

Briefs

SUNNY BEACH - LIQUIDATION OR PRIVATISATION

The state-owned 75% package in the capital of Sunny Beach AD may be sold out through a tender, Deputy Premier and Minister of Economy Lidiya Shouleva said on Wedsenday (November 17) at a meeting of the Parliamentary Economic Commission. The possibility of choosing that solution to the resort company's problem is considerable, because the requirements to future bidders have been already specified. Only hotel owners, tour operators, and providers of services connected with maintenance of roads and water and sewage facilities, will be admitted to participate in the tender. Moreover, they are required to have netted proceeds of BGN50MN from their operation in the last three years. Ms. Shouleva pointed out that an appraiser of the company has already been chosen and it has almost prepared the evaluation. Sunny Beach AD currently owns the resort's infrastructure only, i.e. the alleys, roads, water and sewage facilities and electricity network. In about eight years it succeeded to sell out its other assets. Initially, the idea was to transfer all company assets and then proceed with its liquidation. However, this scenario was not successfully played. The main reason was the argument between Sunny Beach and Electricity Distribution of Stara Zagora about the licence for transfer of electricity on the resort's territory. A 5-member team of the Supreme Administrative Court finally nullified the permission given to the electricity distribution company and obliged the commission to issue such a licence to the owner of the infrastructure. As of May 19, 2004 Sunny Beach carries out such activities as well. On the other hand, under the Energy and Energy Efficiency Act, Electricity Distribution of Stara Zagora is obliged to buy the electricity distribution network from Sunny Beach at market prices. However, the two parties failed to reach an agreement. A way out of the situation has already been found. Ms. Shouleva announced that the Austrian company EVN, which had acquired 67% of Electricity Distribution of Stara Zagora and electricity Distribution of Plovdiv against EUR271MN, promised to buy the resort's electricity distribution equipment as well. There is an offer for the alleys and roads, too, coming from the Union of Hotel Owners in Sunny Beach. Their proposal arrived in the Ministry of Economy back on July 20. Negotiations between the ministry and the union are presently going on, and the Municipality of Nessebar has joined. There is an idea to set up a joint venture between the municipality and the Union of Hotel Owners in Sunny Beach, which would participate in an evеntual tender in the future or in the sale individual assets. The second option has not been ruled out by Economic Ministry yet. If it is effected, procedures for the company's liquidation will follow. Independently what way for solving the problem of Sunny Beach is chosen - liquidation or privatisation - numerous questions connected with the resort's future will remain. Some MPs voiced concern that after selling the infrastructure, the new owner could abuse its dominant position and injure the interests of the others which will be certainly using its services. Ms. Shouleva did not miss to point out that in September 2003 she had proposed that the national resorts should be granted a statute of population centres, but it was not supported. According to her, that would make possible to turn their infrastructure public, i.e. either state-owned or municipal. She even appealed to the members of the Economic Commission to demand changes in that direction. Presently, the infrastructure of Sunny Beach AD could be only private and no guarantees could be given about the scrupulosity of its future owner, who will become known pretty soon. The company's balance sheet, submitted to the Bulgarian Stock Exchange-Sofia, shows that its long term assets were worth BGN99.6MN as of September 30, 2004. It reserves amounted to BGN74.4MN, and its non-distributed profit totalled BGN12.1MN. Sunny Beach AD's profit for the first nine months of the year was almost BGN1.8MN. Its proceeds for the period were BGN16.7MN, the bulk of which came from sale of assets and electricity distribution services, which thе company has been providing in the last quarter. On Septembеr 3 Ms. Shouleva banned all deals in assets of the company.

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