Банкеръ Weekly



After several long sessions that dragged on within two months, the Parliamentary Economic Commission at last prepared the draft bill on privatisation and post-privatisation control for voting at a plenarry session. The delay has considerably upset the schedule for closing deals with the Privatisation Agency (PA), and by end-January tenders and contests for only three insignificant companies and two self-contained parts will be held. For comparison - six enterprises were sold and purchasers for about a dozen more were nominated in December 2001.At the session of the Parliamentary Economic Commission on January 16 some major provisions in the bill were amended. Proceeds from the sale of self-contained parts in single-shareholder state-owned trade companies shall go into their accounts, and only by exception into the Treasury. The decisions for that shall be made by the PA, but only adter coordination in advance with the ministry, which is the prinicpal of the respective companies.Thus, for example, a legal possibility will be created for the money from the privatisation deal on the Bearings Plant (which is a self-contained part of the Vazov Mechanical Engineering Works of Sopot) to be used for payment of the liabilities and wages at the enterprise itself, instead of going to the State's budget. The same principle will be probably applied towards the companies, in which the State Insurance Institute (DZI) holds shares. DZI controls 93% of the insurance and reinsurance company Armeetz. So if the latter is to be sold as a self-contained part, it won't result in DZI's depreciation.So far such a scheme was applied only towards companies, in which private shareholders in addition to the State held shares. Typical examples for that are Golden Sands AD, Sunny Beach AD, Pamporovo AD, and Borosport AD. A considerable number of hotels and restaurants at these resorts were initially sold, and after the privatisation of their shares (with the exception of Sunny Beach AD, which is still a state-run company), the money remained at the disposal of their new owners. Obviously, this was not much to the satisfaction of private shareholders. Therefore, the question arises whether it was not more pertinent to find a mechanism for distributing the proceeds from the sale of individual hotels directly between the State and the small shareholders. Some provisions in the bill, aimed at the facilitation and finaliaztion of the second wave of mass privatisation, were amended as well. The process, from which only a few got profits, had to be finalized by December 31, 2001. This date does not change regarding the issuance of new investment bonds. The mass privatisation tenders for the sale of shares in unattractive companies, however, will continue till September 30, 2002. By then the State should find a possibility for using the privatisation vouchers, worth more than BGL250MN. Hence, within three months after the enforcement of the new law on privatisation and post-privatisation control, the owners of majority stakes, entitled to purchase the remaining shares and the companies under their control, shall have to decide whether they would undertake such an operation. Otherwise, the shares in question will be offered to the mass investors. The BANKER weekly has information that four more firms will be added to the list of companies, parts of which shall be privatised on the exchange against compensation instruments, and their total number will reach seventeen. The list will be supplemented by: the National Electricity Company EAD (NEC), DZI, the International Fair EAD - Plovdiv, and the Exploration and Extraction of Petrol and Gas EAD - Pleven. Up to 49% of the last two companies' capital will be offered for sale on the exchange, and 20-25% of their assets will be purchased against compensation instruments. Between 5-15% of the other comapnies shares will be offered. The Programme for Promotion and Development of the Capital Market, agreed with the Minsitry of Economy, projects to launch on the stock exchange pilot 5% packages of DSK Bank and Bulgartabac Holding each.Due to the delayed passing of the Act on Deals in Compensation Instruments, however, privatisation on the exchange agaisnt agricultural bonds will be delayed, too. The draft bill was for the first time discussed in Parliament on January 18 by the Sub-Commission on Innvestments and Capital Markets, headed by the MP from the National Movement Simeon II Ralitsa Again. The bill is to be approved by the Economic Commission on January 23 and be moved for discussion at plenary session on January 24. The deputies will have three weeks to offer new proposals. If there are no serious debates, the law can be expected to be passed in the beginning of March.The amendments to the Public Offering of Securities Act will discussed at the same space. On January 18 the commission, headed by Ralitsa Again was discussing the old draft, moved by the Government. The expert group, debating on this specific act, has already made about a dozen of amendments and supplements, but they will be included in its provisions only on the second reading in the commission, Ms. Again said for the BANKER weekly. The work on the draft bill has been almost completed. There are two or three debatable privisons and the MPs will hardly have much to do. Moreover, the matter is too sophist

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