Банкеръ Weekly



The units formed for management employee buy-outs (MBO) proved to be favoured by Bulgarian privatization experts this year as well. No matter they availed themselves of some political protectionism, or were allowed deferred payment for the signed contracts, etc. In the Privatization Agency report we can see that for the first three quarters 40% of the totally sold 362 enterprises were privatized by that type of formations. On the contrary, the foreign investors, so insistently invited by Bulgarian privatization experts, amount to nine only. It will be small wonder to find out that in this number are companies, registered in the famous offshore zones like Cyprus or the Delawere State in USA.

Are these data indicative of the withdrawal of foreign investors from the Bulgarian market? Truth seems to be different. Investors seem to have realised how to purchase the enterprises they like at a lower price. The newly developed notion is to finance the MBO units, which on their part will be able to obtain a better repayment schedule. Some time later, the company extending the financing, will simply buy-out the shares of the newly privatized enterprise, thus factually becoming its owner. We can simply keep in mind the event a couple of weeks ago, when the Dutch Trafigura Beheer acquired a share in the Non-Ferrows Metal Plant in Plovdiv

That is why the new privatization strategy of the Government, concentrating on limitation of the rights of the MBO units seems to be somewhat outdated. There are very few attractive deals left, and the other will be disliked by the MBO units as well.

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