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Oct 19, 2007 15:22 EEST
October 19 (SeeNews) - The Bulgarian government will decide after local elections this month whether to privatise tobacco group Bulgartabac Holding, Bulgartabac CEO Hristo Lachev said late on Thursday.
“After the elections a decision on the future of subsidiaries of Bulgartabac will be taken,” Lachev told a news conference.
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Bulgaria will hold local elections on October 28.
Earlier this year the cabinet failed to agree on amendments to the legislation allowing for the privatisation of Bulgartabac’s four cigarette mills, the group’s most valuable assets. The group's privatisation has been delayed for years by political wrangling.
Bulgartabac, a former cigarette monopoly, began to lose market share to international majors with the liberalisation of the local market after Bulgaria joined the EU in January.
The group expects its sales also to be hurt by a rise in excise duties on tobacco products, which Bulgaria has to bring in line with the EU level.
“We believe we will maintain a market share of around 70% next year,” Lachev said, adding that the group expects the legal cigarette market to shrink by up to 40% after a rise in excise duties, which will fuel the growth of contraband cigarettes.
The legal cigarette market in Bulgaria dwindled from 18,000 tonnes in 2005 to 14,000 tonnes in 2006 when the government increased sharply excise duties levied on cigarettes, Lachev said.
Bulgartabac is undergoing a restructuring aimed at reducing costs and raising its competitiveness in the common EU market.
By the middle of next month the group will call a tender for the sale of two tobacco processing units, Yambol BT and Kardjali BT, and expects to sell them by the end of the year, Bulgartabac said.
As part of the restructuring the group is closing and selling its loss-making units. It has raised some 45 million levs ($32.9 million/23 million euro) from sales of units over the last year.
Shares in Bulgartabac, closed 1.44% lower at 33.41 levs on Friday.
(1 euro=1.95583 Bulgarian levs)
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