Банкеръ Weekly



Greek investors acquired 67% of the capital of Sheraton Sofia Balkan AD through four block deals on May 13. Companies related to Greek Hotels already hold 46% of the shares of the hotel. Axon Bulgaria which is controlled by Germanos (distributor of Bulgaria's second GSM-operator GloBul) holds 14%, and Eurobank Properties - close to Bulgarian Post Bank's owners, possesses 7 per cent. The Greek millionaire Latzis is believed to be supporting the new shareholders of the hotel. Until now Sheraton Sofia Balkan has been property of the Korean DAEWOO group. At their general meeting on May 13 the hotel's shareholders appointed representatives of the new owners to the Board of Directors (BoD).By splitting the majority package into four smaller stakes the Greek investors avoided the necessity to make an offer for the rest of the Sheraton's shares. Therefore, they did not have to pay another BGN23MN for the purchase of teh hotel's remaining stocks. Under the Public Offering of Securities Act, when an investor takes more than 50% of a public company's capital, he is obliged to pay a fair price to the rest of the shareholders.The company that lost most from the block deals was Albena Invest Holding. The former privatisation fund, which is close to the Deputy Premier and Minister of Labour and Social Policies Lidiya Shouleva,controls 10.8% of the capital of Sheraton Sofia Balkan. Representatives of the holding said they would ask the court to declare the most recent general meeting of the company illegal due to procedural irregularities. Some of the members of the BoD were dismissed at the previous general meeting of Sheraton on March 16. Although not registered in court, in April the new BoD scheduled a new meeting for May 13. This is a violation, commented the minority shareholder.But even if the court etends a ruling in favour of the holding, the benefit will still be very dubious. Such a decision will only impede the Greek companies from taking the management of Sheraton Sofia Balkan immediately, but it will not delay the change of ownership. Even in this case no tender offer will be placed.The former owners from DAEWOO can boast of relatively good return on investments. In 1996 the Koreans privatized Sheraton for USD22.3MN. The price that is now paid is almost the same - BGN146.41 per share, BGN46.9MN for the whole stake. The dividends the Koreans have received since 1997 are their net profit. BGN41.93 per share has been paid in the past five years. Therefore, the bankrupt Korean company has gained BGN13.4MN from the 320,619 shares it held in the Sofia-based Sheraton.The minority shareholders in Sheraton also enjoyed the period during which DAEWOO controlled the majority stake. The dividend policy of the Greek companies is not clear yet. After announcing their investment plans, they may decide not to distribute the company's 2002 profit in dividends. Then the shares of the five-star hotel will no more be blue chips on the stock exchange. Brokers comment that the shares of Sheraton Sofia will probably lose part of their value in the coming 12 months. When they depreceiate from the current BGN35/share to about BGN20 apiece, the Greek investors will be able to buy them cheaper.

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