Bulgaria Delays Sale of Cigarette Maker Bulgartabak

Source from:  Reuters 11/11/2009

Bulgaria has delayed the sale of tobacco company Bulgartabak Holding until end-March, and plans to hire a consultant to help structure the deal, Economy and Energy Minister Traicho Traikov said on Tuesday. The new government, which won July elections, initially aimed to sell the company by the end of 2009, at an open auction, but the plan failed to attract the interest of major tobacco companies. Bulgartabak, the country's leading cigarette maker, has a market capitalisation of 155 million levs ($118.8 million). "The initial idea was not the most suitable… We have decided to hire a consultant to help structure the deal," Traikov told reporters. "The sale will be delayed, but could happen in the first quarter next year". The sale will be the fourth attempt by Sofia to dispose of the former tobacco monopoly, whose key assets are the cigarette mills Sofia BT and Blagoevgrad BT. Previous attempts to sell the company failed due to political wrangling and, according to some analysts, because political and economic groups benefited from cigarette smuggling and lucrative state-financed contracts with Bulgartabak. British American Tobacco offered 200 million euros ($299.6 million) for Bulgartabak in 2005, but the deal was blocked by the ethnic Turkish MRF party, a junior coalition partner in the previous two governments, and BAT withdrew its proposal. Industry insiders say the holding was not likely to fetch even half of BAT's offer, as market liberalisation has eaten into Bulgartabak's market share since 2007. Another hurdle is the government's plan for a ban on smoking in all public places, including bars and restaurants, from July 2010. In Bulgaria half of the adult population smokes, and the country ranks second after Greece in the EU in terms of regular smokers. The new cabinet has also raised excise duties on cigarettes by 43 percent in an attempt to curb smoking.($1=.6676 Euro) ($1=1.305 Leva) Enditem