Despite the first results from the bidding procedures, the other three candidates for Bulgartabac seem to be far from just quitting the fight peacefully.
Monday’s opening of tender offers showed that Sofia-based Metatabac, owned by controversial businessman Michael Chorny, earned 95.20 points. The offered price is 110 million euros, the investment volume is 23 million euros, and the annual amount of tobacco to be purchased averages 47,000 tons.
Tobacco Holding offered to pay 96 million euros, to invest 56 million euros, and to purchase 47,400 tons of tobacco a year. The bid gained 91.75 points.
The RosBulgartabac consortium won 82.02 points with its 64 million euro price offer, its 95.7 million euro investment projection, and its 47,800 tons average volume of annual tobacco purchases.
Meanwhile, Georgi Tasev, the representative of Metatabak in Bulgaria announced that Metatabak intends to withdraw from the race due to the poor organisation of the procedure. Tasev asserted that the fact that the Russian claims on Bulgartabak property have not been settled yet is alarming and Metatabak filed a letter with the Privatisation Agency (PA) in the morning of the final deadline to demand quick resolution of the claim issue.
Media reports on Monday said that Russia dispatched a fourth diplomatic note on its claims to Bulgartabac three days before the official deadline for the binding offers of the tobacco holding.
The note, requesting from the Bulgarian Government the preclusion of the Bulgartabac deal, was sent by the Foreign Ministry of Russia. The document was handed to the Bulgarian Foreign Ministry late in the evening last Friday, the head of the press office of the Foreign Ministry Eleonora Dimitrova was quoted as saying.
Tasev’s statement was backed up by the president of Grandtabac, the Association of Tobacco Distributors in Russia, Sergei Shelehov. The Association agreed with the stand of the Russian Government that property claims should be presented to Bulgartabac, Shelehov said. Grandtabac supported Metatabac’s opinion that the procedure was not transparent enough and that would be the stand of the Association of Tobacco Distributors. It is not clear how Tobacco Capital Partners intends to work on the Russian market, where there is 30 per cent overproduction. However, Grandtabac is ready to negotiate with the winner of the tender if the interest in a dialogue is bilateral, he said.
According to an article on Grandtabac’s web site the Bulgarian Government has openly made fun of Metatabac, Pari daily newspaper announced on Tuesday. The representatives of the Russian consortium intend to dispute the results and in the event of failure will ask the court to revoke them.
“We are ready to increase our bid for Bulgartabac Holding,” Tobacco Holding’s managing director Agustin Salduegi said Tuesday, prompting further media speculation. The Vienna-registered company was ranked third among the four candidates for Bulgartabac.
“We can raise the price enough to outbid the competitors,” Salduegi said. According to an expert assessment ordered by Tobacco Holding, the stake offered in Bulgartabac amounts to 92 million euros.
If the PA finds the financial proposals unsatisfactory, the procedure allows it to ask all bidders to improve their offers. However the decision for a new bidding can only be taken by the working group on the deal, which cannot be done before August.
Meanwhile, last Friday it was announced by the Economy Ministry that the future buyer of Bulgartabac Holding will not have the right to dispose with its shares or part of them for a period of five years. This is a condition set by a decision of the working group for Bulgartabac’s sale at a July 18 meeting.
The buyer will have the right to use the shares as collateral only after obtaining the written consent of the Agency for Post-privatisation Control and presenting enough guarantees for meeting the obligations under the privatisation contract.
The decision also lists the cases when the seller has the right to terminate the contract. This is when the buyer delays for more than seven days after the set timeframe payment of the remaining amount of the purchase price and expiry of the additional deadline; in failure to repay overdue debts of the subsidiaries to the national budget or to the Tobacco fund; in failure to present unconditional and irrevocable bank guarantee from a reputable bank issued in favour of the Agency for Post-privatisation Control to the amount of 30 million euros.
When the contract is terminated in connection with the above circumstance, the seller retains damages to the amount of 2.5 million euros.
Damages of 80 million euros will be due in the event of failure to meet the requirement to buy the stated quota of tobacco for the respective year by more than 20 per cent.
Monday’s opening of tender offers showed that Sofia-based Metatabac, owned by controversial businessman Michael Chorny, earned 95.20 points. The offered price is 110 million euros, the investment volume is 23 million euros, and the annual amount of tobacco to be purchased averages 47,000 tons.
Tobacco Holding offered to pay 96 million euros, to invest 56 million euros, and to purchase 47,400 tons of tobacco a year. The bid gained 91.75 points.
The RosBulgartabac consortium won 82.02 points with its 64 million euro price offer, its 95.7 million euro investment projection, and its 47,800 tons average volume of annual tobacco purchases.
Meanwhile, Georgi Tasev, the representative of Metatabak in Bulgaria announced that Metatabak intends to withdraw from the race due to the poor organisation of the procedure. Tasev asserted that the fact that the Russian claims on Bulgartabak property have not been settled yet is alarming and Metatabak filed a letter with the Privatisation Agency (PA) in the morning of the final deadline to demand quick resolution of the claim issue.
Media reports on Monday said that Russia dispatched a fourth diplomatic note on its claims to Bulgartabac three days before the official deadline for the binding offers of the tobacco holding.
The note, requesting from the Bulgarian Government the preclusion of the Bulgartabac deal, was sent by the Foreign Ministry of Russia. The document was handed to the Bulgarian Foreign Ministry late in the evening last Friday, the head of the press office of the Foreign Ministry Eleonora Dimitrova was quoted as saying.
Tasev’s statement was backed up by the president of Grandtabac, the Association of Tobacco Distributors in Russia, Sergei Shelehov. The Association agreed with the stand of the Russian Government that property claims should be presented to Bulgartabac, Shelehov said. Grandtabac supported Metatabac’s opinion that the procedure was not transparent enough and that would be the stand of the Association of Tobacco Distributors. It is not clear how Tobacco Capital Partners intends to work on the Russian market, where there is 30 per cent overproduction. However, Grandtabac is ready to negotiate with the winner of the tender if the interest in a dialogue is bilateral, he said.
According to an article on Grandtabac’s web site the Bulgarian Government has openly made fun of Metatabac, Pari daily newspaper announced on Tuesday. The representatives of the Russian consortium intend to dispute the results and in the event of failure will ask the court to revoke them.
“We are ready to increase our bid for Bulgartabac Holding,” Tobacco Holding’s managing director Agustin Salduegi said Tuesday, prompting further media speculation. The Vienna-registered company was ranked third among the four candidates for Bulgartabac.
“We can raise the price enough to outbid the competitors,” Salduegi said. According to an expert assessment ordered by Tobacco Holding, the stake offered in Bulgartabac amounts to 92 million euros.
If the PA finds the financial proposals unsatisfactory, the procedure allows it to ask all bidders to improve their offers. However the decision for a new bidding can only be taken by the working group on the deal, which cannot be done before August.
Meanwhile, last Friday it was announced by the Economy Ministry that the future buyer of Bulgartabac Holding will not have the right to dispose with its shares or part of them for a period of five years. This is a condition set by a decision of the working group for Bulgartabac’s sale at a July 18 meeting.
The buyer will have the right to use the shares as collateral only after obtaining the written consent of the Agency for Post-privatisation Control and presenting enough guarantees for meeting the obligations under the privatisation contract.
The decision also lists the cases when the seller has the right to terminate the contract. This is when the buyer delays for more than seven days after the set timeframe payment of the remaining amount of the purchase price and expiry of the additional deadline; in failure to repay overdue debts of the subsidiaries to the national budget or to the Tobacco fund; in failure to present unconditional and irrevocable bank guarantee from a reputable bank issued in favour of the Agency for Post-privatisation Control to the amount of 30 million euros.
When the contract is terminated in connection with the above circumstance, the seller retains damages to the amount of 2.5 million euros.
Damages of 80 million euros will be due in the event of failure to meet the requirement to buy the stated quota of tobacco for the respective year by more than 20 per cent.
