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Bulgaria Seals Sale of Bulgartabac to Russian Bank VTB
Date: 02/09/2011
Bulgaria Seals Sale of Bulgartabac to Russian Bank VTB

The Supervisory Council of Bulgaria's Privatization Agency has given the final go-ahead for the sale of state cigarette-maker Bulgartabac to BT Invest, a firm wholly owned by Russia's government bank VTB.

After five-hour debates on Friday, the Supervisory Council of the Privatization and Post-privatization Control Agency approved the sale of Bulgartabac to VTB for EUR 100.1 M with 6 votes in favor and one vote against.

The news was broken Friday night by the Council chair Yuliya Nenkova. The only vote against the sale came from the representative of the Bulgarian Socialist Party Rusi Statkov.

Nenkov told reporters she was confident the deal was beneficial for Bulgaria. The Privatization Agency had a 15-day deadline to decide on the bid.

On Tuesday, after one day of examining documentation, the Bulgarian Privatization Agency approved the sale of the State-owned tobacco monopoly Bulgartabac Holding to BT Invest, a firm registered in Austria by VTB bank, property of the Russian government.

The price offered by BT Invest, the sole bidder standing, after several major players withdrew, is EUR 100.1 M with investments of BGN 7 M in the next two years and the commitment to purchase 5 000 metric tons of Bulgarian tobacco a year (about 14% of the crop). The draft contract also includes a clause banning a resell in the next 5 years.

The Governing Board of the Privatization and Post-privatization Control Agency is a political body, elected by the Parliament. It consist of three representatives of the ruling Citizens for European Development of Bulgaria, GERB, party, one each from the opposition left-wing Bulgarian Socialist Party, BSP, the opposition ethnic Turkish Movement for Rights and Freedoms, DPS, the right-wing Democrats for Strong Bulgaria, DSB, and the far-right, nationalist Ataka.

Also on Friday, the Bulgarian Dnevnik daily reported that the Russian Federation has submitted a request for a guarantee for a future claim against the Bulgarian State-owned cigarette maker Bulgartabac Holding, but the Sofia City Court had not examined it.

Meanwhile, the labor union of the Bulgartabac workers organized a protest rally in front of the Privatization Agency's building in Sofia. They oppose the sale of the cigarette maker to the only remaining bidder in the public procurement procedure and insist that the Governing Board rejects the offer.

In a declaration to Prime Minister, Boyko Borisov, the Union demands halting the deal and the resignation of the Privatization Agency's CEO, Emil Karanikolov. About 500 people took part in the rally.

Topic: Economy

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