Банкеръ Weekly



After complications which lasted for six months, the Riviera Resort shareholders finally found out a legal procedure to increase the company capital. The General Assembly voted the conditions for the issuance of new shares. If the shares are bought up, Riviera bank accounts will get BGL5.391MN. The managers intend to invest the amount in countryside hotels for the development of rural tourism. According to the management this will diversify the company portfolio. In the meantime Riviera has transferred to Riviera Management, its majority owner, 19.3% of its long term material assets. This brought the starnge situation where a seaside based company is turning to rural tourism, which has been gaining popularity in Bulgaria lately.
Subscription for the new shares will start on May 20, 2001. Within one month present owners will be able to subscribe shares proportionally to the number they currently own. Three days after June 20, 2001 the non-subscribed shares can be subscribed proportionally to the current stakes. An interesting decision of the General Assembly is the fact that only 25% of the value of the newly acquired shares is payable upon subscription. The remaining amount is payable within two years. This brings some doubts that Riviera is not so much in need of fresh money, but capital increase is rather targeting changes in the resort's shareholder structure.
At present Riviera Management - the MEBO unit controlled by Emil Kjulev - owns 93% of the seaside resort. The MEBO unit acquired this considerable stake after a number of operations. In January 1998 were privatised 60% of the resort's shares. At that moment the stake was evaluated at USD11MN. Only 10% of them, however, were paid cash. The remaining USD9.9MN can be paid in compensatory instruments. So that Riviera Management had to pay for the 60% stake not more than USD3MN.
In 1999 Riviera capital was increased twice, after which it reached its current value of BGL4.409MN. The last share issue, which took place in December 1999, caused considerable stir. At that point the MEBO unit covered the price of its papers with long term assets - Aglika hotel unit with total covered area of 2447 square metres, villa Aglika - 630.7 square metres, as well as a tennis court and two parking grounds. These long term assets were evaluated at BGL3.386MN - three times the value of the whole Riviera resort. Actually the goal of that operation was further dissolving of the seaside resort's capital, as it was namely after that operation when the MEBO unit took control over 93% of its shares.
In 2000 more than 75% of Riviera visitors were foreigners. Guests from Germany and Russia were prevailing in number, but tourists from Belgium, the Netherlands, Finland and Austria also visited the resort. A slight increase of the German, Belgian and Austrian tourists is expected for the new season, but in general revenues will remain without considerable changes.

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