Bulgaria Launches Privatization of State Tobacco Giant

Bulgaria's state cigarette producer Bulgartabac Holding, whose management has been harshly criticized in recent years, will be declared for privatization on Tuesday after years of procrastination.

The long-delayed procedure will be given the go-ahead by the agency for privatization and post-privatization control.

The sale of Bulgartabac Holding AD, Sopot-based Vazovski Mashinostroitelni Zavodi or VMZ, and the minority stakes in the electricity distributors have been said to be a must-do task in 2011 due to the sorry performance of the state-owned companies.

Citigroup, the consultant preparing the sale of the state company, has made preliminary inquiries with about 100 potential strategic and financial investors from around the world with respect to Bulgartabac's privatization in order to make sure that all "serious" investors are aware of the sale of the Bulgarian cigarette company.

According to the Economy Ministry, there is a sufficient number of companies interested in the privatization of Bulgartabac because it is an attractive asset even at times of crisis.

The method of privatization - – i.e. whether Bulgartabac will be sold through a tender, an auction, or on the Sofia Stock Exchange – will be selected based on the number of interested bidders.

The Economy Ministry said it wants to find a buyer for Bulgartabac by the summer of 2011.

In spite of declarations in April 2010 that Bulgaria's Privatization Agency hoped to complete the sale of state-owned cigarette monopoly Bulgartabac in 2010, no such deal went through by the end of December 2010.

The consultant for the Bulgartabac sale, Citigroup Global Markets Ltd, was picked by the Bulgarian government in February 2010.

Two of the less profitable plants of Bulgartabac holding – in the cities of Plovdiv and Stara Zagora – were sold in 2009 through the Sofia Stock Exchange – for BGN 31 M and BGN 18 M respectively.

The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.