Банкеръ Weekly



The sale of the Varna Shipyard might be delayed by years if creditors litigate its evaluation in court. Last week the auditing company PriceWaterhouseCoopers estimated the shipyard's market value at BGN40MN in the conditions of quick privatisation. In fact, by end-January the term in which the shipyard would be sold will be known. After the Varna District Court announced its insolvency, the shipyard's trustees in bankruptcy should now apply to the court for invitation of a tender. Then some of the creditors can appeal against the magistrates' decision with the motive that the minimum asked purchase price is too low.Allegedly, this will be done by the Varna-based company Dolphin 1. However, it is said that the Deputy Premier and Minister of Economy Nikolai Vassilev, who has personally undertaken a commitment for a successful completion of the deal on the shipyard in his native town, would use all his authority in order to prevent such a delay. On January 14, 2002, Mr. Vassilev said that if anyone appeals against the evaluation, we'll meet in 2004. This can be interpreted in two ways: either the Deputy Premier and the Ministry of Economy would stop any curtsies to the respective creditor, or the shipyard's sale would be delayed till then.For the time being PriceWaterhouseCoopers has only submitted a working copy of the shipyard's evaluation and in the words of the trustee in bankruptcy Dimitar Smilenov some inaccuracies have been found in it. Nevertheless, he expressed his assureness that the tender would be invited next week and the court would fix a date for it on the same day. Thus, the bidding for the shipyard's privatisation as a whole enterprise could be held in the beginning of March.The attempts for inviting a new general meeting of creditors in order to demand a higher evaluation of the company's assets also seem doomed to failure. Under the Commercial Code, the creditors controlling at least 20% of the company's liabilities should unite around such a demand. However, almost 65% of the Varna Shipyard's debt is to the State. The remaining liabilities are to the enterprise's employees, to the Central Cooperative Bank (which would hardly want to hold a general meeting), and to smaller creditors (who are unlikely to be organized). In that way, the only one but quite serious hindrance to holding a tender in March remains its litigation.The other important issue to be solved is whether the first class creditors - Central Cooperative Bank (CCB) and the Bank Consolidation Company (BCC) - would be willing to sell by themsleves (without the mediation of the trustees in bankruptcy) the vessel that has been put in pledge to them. Mr. Smilenov explained that if they are willing to do that, the unfinished ship No 501 would be deducted from the shipyard's assets. This would make necessary a revaluation of the shipyard's remaining assets. The two creditors have rights not only on the vessel, but on all assets, intended for its building.According to experts, between USD6,500,000-8,000,000 could be expected from the ship's sale. This means that CCB will get its receivables of USD2,700,000. The balance will go to the accounts of the BCC, whose receivables are around BGN42MN. However, the BCC will be able to get the entire amount only if the proceeds from the tender for the sale of the shipyard's assets and of ship No 501 exceed BGN48MN. This is the amount of the shipyard's aggregate debt to CCB and the BCC, which are first class creditors. In case of lower proceeds, the BCC will get everything, except the amount received by CCB. The other creditors would have a chance to get their money only if there is more than BGN48MN to be distributed. In such a case the shipyard's employees (who are second class creditors) would get their overdue remuneration.Despite the insistance and protests on the part of syndicates, it has become clear that there is no legal possibility for selecting in advance the bidders in the future tender. Any companies and even natural persons who dispose of at least BGN40MN could take part in the tender. Among the favourites for the shipyard's purchase are the US company Hawgan Marine, the Greek Kiriaku Group and the Indonesian company Seagasco.Representatives of Howgan Marine held talks with the managers of Navigation Maritime Bulgare (Navibulgar) on January 15, Slaveiko Staikov, Chairman of Navibulgar's BoD, announced. According to unconfirmed information, the aim of the visit was the signing of a preliminary contract between Hawgan Marine and Navibulgar for the purchase of the unfinished Trapezitsa ship and of vessel No 501 at a token price. Pundits say that the US company wants to present the contract to a bank in order to draw a credit for participation in the tender for the Varna Shipyard. Allegedly, a meeting with Deputy Premier Nikolai Vassilev, who is not taking this scenario in good part, has been required. Navibulgar insiders commented that the Minister of Transport and Telecommunications Plamen Petrov has personally invited Navibulgar's CEO Geno Genov, insisting that the latter should accept the representatives of Hawgan Marine.The scandals regarding the Swedish company Fisson Invest have not cooled down its enthusiasm either. The Scandinavian's lawyer in Bulgaria Menko Menkov told the BANKER weekly that next week it will be known when company representatives would arrive to make their own survey into the shipyard's assets. Last summer Fisson Invest presented a business plan at the Ministry of Economy, offering a price of BGN56MN.If no bidders turn up at the tender all procedures will start again from the beginning. The creditors will have to apply for a new evaluation and a new bidding should be invited.After the lack of orders for repair of vessels in November 2001, the end of last year was more favourable for the Varna Shipyard. Greek, Polish and Dutch vessels are being repaired in its dockyards lately. The proceeds from this activity, however, are only sufficient to pervent the increase of the shipyard's liabilities.

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