Банкеръ Weekly



The transference of LUKoil Neftochim's preferential shares, sold by the Privatisation Agency (PA) two months and a half ago, began on Friday (June 15). However, only a part of the preferential shares changed hands in a transaction on the block segment of the Bulgarian Stock Exchange - Sofia (BSE-Sofia) due to the insufficient time for handling the depository receipts, an expert explained to the BANKER weekly. Obviously, the remaining stocks of the oil refinery will reach the end recipient in portions.
A total of 1,781,786 shares, representing 13.17% of the Bourgas-based refinery's capital, were privatised in end-March, but the depository receipts for them were not acquired until three weeks ago. Meanwhile, the PA was collecting data about the authenticity of the compensatory notes by which 70% of the shares were paid. According to preliminary information, about 1,700,000 of the stocks were bought through financing from LUKoil Neftochim's managers themselves, who ensured to the refinery's workers money for the purchase by contracts for assistance. According to Neftochim's employees, the shares will be later on transferred to an investor, nominated by the refienry's managers. After all stocks are transferred, the Russian corporation LUKoil and affiliated companies will gain control over 70% of the enterprise's capital.
It turns out that all employees of the refinery have practically signed agreements with the management for purchase of preferential shares. The former employees of the company, on their part, who did not invest own funds, resorted to the services of investment intermediaries, who are said to have offered quite advantageous terms. The Bourgas-based financial house Eurodealing was the most active in that respect, and according to some sources it bought out several ten thousand of shares.
The PA sold LUKoil Neftochim's preferential shares at BGL6.90 apiece. Thirty per cent were paid in cash, and the balance - in other legal non-cash instruments of payment. Both the refinery's management and the investment intermediaries, who participated in the purchase, were largely paying in cheap compensatory bonds, issued against unrestituted agricultural land to its former owners. For that reason the compensatory notes were selling at 17-18% of their par value in March, and fell down to 15% after the refinery withdrew from the market of agricultural bonds.
The name of the new owner of the 1,700,000 shares, purchased with LUKoil Neftochim's financial assistance, will be officially known in a week. The shareholder is obliged to go public within seven days after the transference of paper is effected. Suprises, however, are not expected. In the words of brokers who wanted to buy stocks on behalf of their clients, their purchase bids were rejected by the following motive: Why do you need shares in a company, whose capital will soon reach BGL1BN?!
Circulating rumours about a new issue of LUKoil Neftochim stocks do not seem entirely groundless. It might be also the main reason for the steep depreciation of the refinery's paper on the BSE-Sofia. The major concern is about the methodology according which the oil deposit in Siberia (to be probably purchased by LUKoil Neftochim) will be evaluated. However, the Public Offering of Securities Act does not allow capital increase of public companies through non-cash contributions.
The transitional and final provisions of the act stipulate that if the privatistion contract on a public company includes a clause for conditional capital increase, the State Commission on Securities should had been advised about that by February 2000 at the latest. It may safely be said that this has not been done. Yet, the misgivings of the stock market players may turn wrong
and everything may go without conflicts. Let's not forget that portfolio investors have been recently inclined to think in the negative as the good news for them over the last few years can be counted on one hand's fingures.

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