Bulgaria's state-owned tobacco monopoly Bulgartabac has revoked the licence of its cigarette plants in Plovdiv and Stara Zagora to produce cigarettes under Bulgartabac-owned brands, the first step towards the sale of the two production facilities, Bulgartabac managing board chair Kornelia Ninova said on February 13 2008, as quoted by investor.bg.

Those brands would be transferred to Bulgartabac's other two plants, in Sofia and Blagoevgrad, within 4-5 weeks, while the facilities in Plovdiv and Stara Zagora would keep their generic tobacco products license, Ninova added.

Although trade unions have objected to closing down the plants in Plovdiv and Stara Zagora plants, Bulgartabac's management believes that to be the only option for ensuring the continued profitable operations of the company.

Ninova said at least eight months were necessary to change the Bulgartabac privatisation strategy, while the company's executive director Hristo Lachev added that if all four plants kept working, the holding company could well finish 2008 in the red and there would be nothing left to privatise.

According to Lachev, the Plovdiv and Stara Zagora plants, whose most important brands are MM and Femina, would finish 2007 with a profit of 2.5 million and 3 million leva, respectively, but only thanks to cash injections from the more profitable Sofia and Blagoevgrad plants, investor.bg said.

Bulgartabac was ready to compensate any of the 600 workers from the two plants that decided to quit or were made redundant, with 10 million leva set aside for that purpose, Lachev said. The employees would be eligible for the equivalent of one monthly wage for each year spent at the plant, up to 20 salaries, he added. The average wage at the Plovdiv cigarette plant was 900 leva and in Stara Zagora it was 700 leva.

Bulgartabac still dominates Bulgaria's tobacco products market with 75 per cent market share in 2007, but it has been steadily losing ground to foreign competitors and its market share since the start of the year dropped to 70 per cent, Lachev said.

The sale of the two plants are part of its strategy to keep up with the competition and Bulgartabac has already received letters of interest for them, though it was unclear whether prospective investors were interested in the plants' business as a whole, or just the real estate, investor.bg reported. As a consequence, Bulgartabac's management did not revoke the two plants' license for tobacco products, making it easier for strategic investors to continue production, Lachev said.