The Privatisation Agency (PA) moved the deadline for submitting offers for the sell-off of seven electricity distribution companies to July 9, the agency announced on May 27.
The previous deadline of June 25, was changed after a request by potential buyers to have more time to conduct a rigorous legal due diligence and financial analysis of the companies that have been included in three packages.
The seven companies pending privatisation are grouped in three packages on the basis of their location. Although prospective buyers can apply for all packages, they can't acquire more than one of the three packages. Tentative bids have been placed by Austria's EVN AG, Greece's Public Power Corporation AE, Italy's Enel SpA, Germany's E.ON Energie AG and Czech CEZ.
Economy Minister Lydia Shuleva announced on May 29 that the state fully intends to retain a 33 per cent minority holding in each company and said that would not be sold after privatisation to third parties. In a meeting with MPs of the parliamentary committees on energy and on the economy she said that this would be stated explicitly in the sales contracts. Analysts said that the clause might cause some concern among the candidate buyers, fearing that a rival could acquire the minority holdings at some future stage and block decision making or operations.
The Government has not considered listing the minority stakes on the stock exchange, Shuleva said. The new owners will be able to acquire the state-owned stake after 2009 at the minimum price they paid for the majority package. By then the local electricity market will be liberalised and the value of the minority package will probably be much higher. This is the first contract that protects the state from a possible capital increase on the part of the new owners, Shuleva said.
Under another clause, if the deal is finalised before May 2005, a general meeting of shareholders will decide on the distribution of dividends. If the deal is concluded later, the decision will rest with the Government. In fact, the Government plans are to sell the electricity distribution companies by November this year. The future owners will not be allowed to dispose of their stake before 2009. They will have to pay 20 per cent of the purchase price upon signing the contract.
On a related matter, all the obstacles before the 226 million euro rehabilitation project for the thermal power plant units, Maritsa Iztok 2, were removed after Japan's Mitsui won on May 28 the case against the Competition Protection Commission (CPC) on the size of the state guarantee.
The court revoked the CPC decision, under which the anti-trust authority was seeking to have the 100-per cent guarantee for the project, approved by Parliament, reduced to 80 per cent.
The Japan Bank for International Cooperation (JBIC) will finance 85 per cent of the project, while the remaining funding to be raised by the plant itself.
The court ruled that the CPC had wrongly cited a European Commission Notice in an attempt to bring down the state guarantee to 80 per cent. The court reasoned that Bulgaria is not obliged to apply the EU requirement for a full state guarantee, but that the CPC adopted the decision after the expiry of the relevant deadline and the decision does not bear the signature of the commission's deputy chairman.
Now that all hurdles before implementation of the project have been removed, a loan agreement with the JBIC will probably be signed by late-June, Energy Minister Milko Kovachev said. The cost of the project will remain unchanged despite the delay and the hike in the prices of metals, Kovachev said.
With its 800-megawatt capacity, Maritsa Iztok 2 is the largest thermal power plant in the Balkans. The rehabilitation project with extend the life of the units by 20 years and raise the capacity by about 150-160 megawatts.
The previous deadline of June 25, was changed after a request by potential buyers to have more time to conduct a rigorous legal due diligence and financial analysis of the companies that have been included in three packages.
The seven companies pending privatisation are grouped in three packages on the basis of their location. Although prospective buyers can apply for all packages, they can't acquire more than one of the three packages. Tentative bids have been placed by Austria's EVN AG, Greece's Public Power Corporation AE, Italy's Enel SpA, Germany's E.ON Energie AG and Czech CEZ.
Economy Minister Lydia Shuleva announced on May 29 that the state fully intends to retain a 33 per cent minority holding in each company and said that would not be sold after privatisation to third parties. In a meeting with MPs of the parliamentary committees on energy and on the economy she said that this would be stated explicitly in the sales contracts. Analysts said that the clause might cause some concern among the candidate buyers, fearing that a rival could acquire the minority holdings at some future stage and block decision making or operations.
The Government has not considered listing the minority stakes on the stock exchange, Shuleva said. The new owners will be able to acquire the state-owned stake after 2009 at the minimum price they paid for the majority package. By then the local electricity market will be liberalised and the value of the minority package will probably be much higher. This is the first contract that protects the state from a possible capital increase on the part of the new owners, Shuleva said.
Under another clause, if the deal is finalised before May 2005, a general meeting of shareholders will decide on the distribution of dividends. If the deal is concluded later, the decision will rest with the Government. In fact, the Government plans are to sell the electricity distribution companies by November this year. The future owners will not be allowed to dispose of their stake before 2009. They will have to pay 20 per cent of the purchase price upon signing the contract.
On a related matter, all the obstacles before the 226 million euro rehabilitation project for the thermal power plant units, Maritsa Iztok 2, were removed after Japan's Mitsui won on May 28 the case against the Competition Protection Commission (CPC) on the size of the state guarantee.
The court revoked the CPC decision, under which the anti-trust authority was seeking to have the 100-per cent guarantee for the project, approved by Parliament, reduced to 80 per cent.
The Japan Bank for International Cooperation (JBIC) will finance 85 per cent of the project, while the remaining funding to be raised by the plant itself.
The court ruled that the CPC had wrongly cited a European Commission Notice in an attempt to bring down the state guarantee to 80 per cent. The court reasoned that Bulgaria is not obliged to apply the EU requirement for a full state guarantee, but that the CPC adopted the decision after the expiry of the relevant deadline and the decision does not bear the signature of the commission's deputy chairman.
Now that all hurdles before implementation of the project have been removed, a loan agreement with the JBIC will probably be signed by late-June, Energy Minister Milko Kovachev said. The cost of the project will remain unchanged despite the delay and the hike in the prices of metals, Kovachev said.
With its 800-megawatt capacity, Maritsa Iztok 2 is the largest thermal power plant in the Balkans. The rehabilitation project with extend the life of the units by 20 years and raise the capacity by about 150-160 megawatts.
