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Bulgaria May Raise at Least $165 Million From Asset Sales

Oct. 3 (Bloomberg) -- Bulgaria, struggling to keep a narrow budget deficit to contain the fallout from the euro-debt crisis, plans to raise at least 250 million lev ($165 million) from asset sales this year.

The government plans to sell by the end of the year stakes in the Bulgarian Stock Exchange and the Central Depository, the Bulgarian State Railways Freight Services Unit, the country’s biggest weapons maker, two energy utilities and two military aviation maintenance plants, Privatization Agency Executive Director Emil Karanikolov said in an interview in Sofia yesterday.

“Our revenue estimate is based on minimum prices, which I hope will be exceeded in the sale auctions,” he said. “It is possible that some of these transactions are completed at the beginning of next year, depending on the time some of the investors will need to examine the companies they’re acquiring.”

Bulgaria, the European Union’s poorest country in terms of economic output per capita, weathered the global crisis without borrowing from international lenders. The government is working to cut the budget gap to 1.3 percent of gross domestic product this year from 2.1 percent last year to help contain the impact from the euro-area crisis. Economic growth slowed to 0.5 percent from a year earlier in the second quarter.

More than three-quarters of Bulgaria’s economy is privately owned after it sold state assets in the two decades following the collapse of communism in 1990. The government seeks to sell the few minority stakes it has left in military equipment plants and power distributors.

Bulgarian Stock Exchange

In about a month, the privatization agency plans to announce the auction for the sale of a 50.05 percent stake in the Bulgarian Stock Exchange and a 43.7 percent stake in the Central Depository AD, the securities settlement company, Karanikolov said. The agency has to complete the evaluation, legal analysis and marketing strategy for the two stakes that will be sold together, he said.

The sale of the state’s 33 percent stake in the two Bulgarian units of Czech utility Energo-Pro on the stock exchange started today. Ninety-seven percent of it was sold for 64.7 million lev, or 27 percent above the initial share price, Ilian Scarlatov, chief executive officer of KBC Securities Bulgaria, said in a phone interview today. If the remaining shares are sold at the same prices as today, the government will get a total price of 68 million lev for the stake, less than the 70 million lev estimated by Karanikolov.


The sale involved shares in the grid operating and the power distribution units, which were acquired by Energo-Pro last year.

The agency will also sell on the stock exchange the government’s 33 percent stake in the power distribution unit and grid operating unit ran by the Prague-based CEZ AS in mid-November, expecting to raise at least 100 million lev, Karanikolov said.

CEZ has not decided whether it will bid for the stake, though it may consider it “if the price is right,” spokesman Ladislav Kriz said by phone today.

The agency plans to resume the auction for the 100 percent stake in the Bulgarian State Railways Freight Services Unit in two weeks, after its Supervisory Board revises the admission criteria to let more investors participate, Karanikolov said. The agency hired several marketing consultants including Ernst & Young LLP and KBC Securities NV, to expand access to more buyers, he said.

Bulgaria canceled a previous attempt to sell the railways’ cargo unit on July 18 after only one buyer, Duet Group, a London-based investment company, applied for the tender.

Weapons Maker

Three potential buyers have expressed interest in buying a 100 percent stake in the Sopot-based Vazovski Mashinostroitelni Zavodi, or VMZ, the country’s biggest weapons maker, Karanikolov said. The candidates include Bulgarian firms EMKO EOOD, Dunarit AD, an explosives producer and Sage Consulting, an arms trader. The plant, which exports the bulk of its weapons, produces guided missiles, a range of mortar bombs and artillery ammunition.

“The sale will probably be completed in January, as some of the candidates still need clearance to access classified information,” Karanikolov said.

The buyer will need to pay VMZ’s 47 million-lev debt to the government plus a price for the stake, Karanikolov said without elaborating.

Optimistic Plan

Also this year, Bulgaria plans to raise at least 15 million lev from the sale of minority stakes in two military aviation plants, Terem Georgi Benkovski in Plovdiv and Terem Vladimir Zaimov in Bozhurishte, he said.

“It is an optimistic plan,” KBC’s Scarlatov said. “It is quite possible that they will be able raise that amount, but not this year. Most transactions take about three months to complete and it is more realistic to expect some of them to close during the first quarter of next year.”

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at

To contact the editor responsible for this story: James M. Gomez at

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