Банкеръ Weekly



All companies privatised during the ruling of Zhan Videnov have been chasing one major aim for the past two years - to be unlisted and to have their shares off the stock exchange. The reason was quite clear - trading on the Bulgarian Stock Exchange (BSE) was only causing them troubles because of the frequent inspections by the State Securities Exchange Commission (SSEC). Besides, they were required to pay quite high fees. Since the Law on Public Offering of Securities became valid in the beginning of 2000, the number of companies traded on BSE fell twice - down to 400.The reverse process seems to be going on for some time, however. In just one week two companies - ProSoft and Pirinsko Pivo, held general meetings, on which their shareholders decided to list the companies on the stock exchange. That was a natural step for ProSoft, owned by the brothers Yulian Genov and Atanas Genov, since the company launched two successful bond issues in the past two years and thus attracted portfolio investors.It's strange, however, that the brewery based in Blagoevgrad wants to be traded on the stock exchange, too. The company was among the first to profit by the chances offered by the law and to escape from publicity in the very start of 2000. Some 47% of its capital was controlled by Zlaten Lev Holding at that time. A 23% stake was owned by small shareholders and another 30% were property of the Ministry of Economy. As the capital was raised several times, however, the control over the brewery was ceded to Cyprian companies. The former privatization fund presided by Valentin Karabashev, Vice Premier in the cabinet of Lyuben Berov, remained the owner of just 26% of the capital. But the off-shore companies are supposed to be related to the holding managers. Otherwise, they would not have agreed to sell the stakes to strangers at symbolical prices. The net assets of Pirinsko Pivo amounted to BGN2.377MN (BGN20 per share) at the end of 1999. It sounds illogical then to allow somebody else to take the majority stake of a company of that kind by selling newly-issued shares at BGN1. By March 31, 2002 the brewery's net worth reached BGN4.626MN (just above BGN4 per share). It means that every holder (including Zlaten Lev Holding) of a single share of the brewery in 2000 has registered losses amounting to five times the share price for a two-year period despite the fact that the company performed quite well during those years. Since 1998 the sales of the plant tripled and reached BGN17.051MN per annum and the company gained 12% of the market. This is a clear evidence that possessing of shares in a well-operating enterprise in Bulgaria does not always guarantee a profit. Obviously, considering the growth of the beer production in the country, investments in the capital of a brewery should be a wise decision. On the other hand, the attitude demonstrated by the owners of Pirinsko Pivo (both the Cyprian companies and Zlaten Lev Holding) does not deserve to be tolerated. Nikola Zikatanov, Chairman of the Board of Directors of the plant, explained to the BANKER weekly that the company was not planning to seek financing from the capital market. The listing of the company was a jesture towards its small shareholders, he said. Neither Zikatanov, nor Peter Alexandrov, Executive Director of Pirinsko Pivo, agreed to name the Cyprian companies that owned the plant, saying they didn't have that information at hand. This is not an example of transparency which should actually be the objective of any company planning to become public.In fact, the transformation of Pirinsko Pivo and of other companies preparing themselves to be listed on the stock exchange may have quite a different purpose. Analysts imply that taxes are the major reason for their enthusiastic decisions to enter the exchange. Until recently, public and private companies were treated equally in this aspect. From January 1, 2002, however, profits from transactions made on the stock exchange are no longer taxed. It means that, if Zlaten Lev Holding decides to sell its stake in Pirinsko Pivo at a price twice exceeding its purchase price, it will pay no taxes. If the same transaction is made over-the-counter (if the brewery was not a public company), a payment of taxes will be required.The need of financing will hardly make many companies list their shares on the market. The tax legislation may appear good stimulus for the development of the capital market in Bulgaria. Whether fiscal affairs are the most correct way for supporting the stock exchange is a different question.

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