To sell or not to sell – that is the question the privatisation agency usually faces when it is negotiating the sale of a state-owned thermal power plant. A good example is Bobov Dol TPP. The plant has been up for sale for four years now and two executives of the sell-off agency were sacked over lobbying for the Greek buyer PPC. This week it emerged the agency will make a fresh attempt to sell the power plant. This time, however, it will stage a competitive procedure after the negotiations with PPC were terminated. Neither the terms nor the date of the tender have been set yet. But the privatisation agency plans to wrap up the deal by the year-end.
The deal for the Rousse heating utility was also shrouded in mystery until very recently but the privatisation agency finally put pen to paper on Tuesday and sold it to Holding Slovenske Elektrarne (HSE). The sell-off deal, which has been the largest in 2007, was finalised after lengthy negotiations with the Slovenian buyer. Its second attempt turned out successful – HSE bought 100 pct of the heating utility for 85.1 mln euro. A day after sealing the contract the buyer announced it will sell 49 pct of the Rousse heating utility to a strategic buyer.
The Slovenian Combination
HSE said in an official statement the decision was a logical way of decreasing the risk on the deal. It added the contract will be long-term and will guarantee the coal supply for the plant and the sale of the produced electricity. Although the Slovenian buyer is refusing to name the prospective partner, unofficial Information of the sell-off agency says it is Russian coal company Mechel.
Russian newspaper Vedomosti reported recently that Mechel wants to buy a stake in the Rousse heating utility from the Slovenian company. According to the publication, the company will take part in the upcoming tender for the sale of Bobov Dol TPP. Mechel’s interest in the Bulgarian thermal power plants stems from the expected oversupply of coal on the Russian market. The Russian company even planned to bid for the Rousse utility in 2006 but then gave it up, writes Vedomosti without giving further details.
The executive director of the sell-off agency, Todor Nikolov, said the Slovenian company has told the agency it is in talks over bringing a strategic partner into the deal. There is nothing wrong with the upcoming resale of a chunk of the company, according to Nikolov. Moreover, such a deal would not violate the privatisaion act. Under the purchase contract, the Slovenian holding company cannot transfer shares in the utility or slash its capital under 51 pct in the first three years without a preliminary approval from the postprivatisation control agency. HSE says in the statement that it will ask for approval to sell 49 pct of the utility to a strategic partner.
The Slovenian buyer must keep the core business activity of the Rousse utility, not liquidate or transform it and settle its debts. According to data of the economy ministry, the company posted a loss of 665,000 levs in the first six months of 2007 whereas its debts run at 66.5 mln levs. The buyer pledged to upgrade the company but has not yet specified either the size or the type of the investments.
Backstage – Deripaska?
Russian tycoon Oleg Deripaska is one of the possible partners of the Slovenian company. Two years ago several foreign media, including Slovenian newspaper Finance, said Deripaska may lay hands on a Bulgarian power plant. The aluminium magnate’s N Plus asked HSE to include it in the deal as a partner paying 49 pct of the price. The Slovenian company did not deny then it was in talks with Deripaska. Yet it said it has not received a direct offer. According to Slovenian media publications, HSE has received at least three more offers for the Rousse utility – from Swiss group FTI and from two financial funds. A possible candidate to finance the deal in Bulgaria is local businessman Hristo Kovachki. His office did not confirm the Information, though, but reminded of the entrepreneur’s interest in the Bobov Dol TPP (he has been renting the state-owned coal mines in the region for a month now).
Holding Slovenske Elektrarne was picked buyer of the Rousse heating utility back in December 2006 but the negotiations protracted for quite long. According to sources of the privatisation agency, one reason is troubles in financing the deal. At first the price was 42 mln euro. Rumour has it that the Slovenian company was served the condition to attract a partner at a state level to offset the high price. Todor Nikolov gave the parliamentary anti-corruption commission a similar explanation for the Slovenian’s negotiations. The commission got a signal from a Russian company that said the Slovenian company was breaking the privatisation procedure by negotiating a resale of the utility before buying it. The anit-corruption commission dismissed the allegations as ungrounded. It never became clear why that Russian company, which did not take part in the procedure, protested against the negotiations of HSE and on behalf of whom. It remains to be seen if the negotiations of the Slovenian company with its Russian peers will turn out a double game that only aims to profit from the resale of a share in the utility. But one thing is for sure: the price will be quite fat.
$1 = 1.4402 Bulgarian levs
35, 1-5/09/07, P36-37
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