BANJA LUKA (Bosnia and Herzegovina), April 4 (SeeNews) – Bulgaria's Bulgartabac has offered severance pay to employees of its tobacco factory in Bosnia's Banja Luka, following reports the factory is set to close shortly leaving a hundred people unemployed, Bosnian media reported.
Bulgartabac is offering to pay each employee 500 euro ($614.5) per year of employment, as the shutdown of the factory is drawing closer, news portal Capital.ba reported on Tuesday.
Out of a total of 100 employees, 90 are said to have accepted the offer.
The severance pay could cost Bulgartabac some 2 million marka ($1.3 million/1 million euro).
The government of Bosnia's Serb Republic entity had earlier asked Bulgartabac to continue production and keep all jobs, by either searching for a strategic partner or selling the factory.
The Bulgarian company, however, recently informed the government in a letter that the chances of finding a strategic partner are virtually non-existent.
According to Capital.ba, Bulgartabac also said in the letter that it has offered a very favourable alternative to its employees, pointing out that additional delays in the closure of the factory would only lead to the prolongation of uncertainty and additional costs for the employer.
After British American Tobacco (BAT) announced in April last year it has acquired Bulgartabac's entire range of cigarette brands in Bosnia, including those produced in Banja Luka, as part of a larger deal with the Bulgarian company, workers said that Bulgartabac is shutting down the 130-year old factory.
According to Capital.ba, the employees were informed of the pending closure in February, and were told that Bulgartabac "no longer works in the tobacco industry".
BAT said in April 2017 it signed an agreement with Bulgartabac to buy the Bulgarian company's leading cigarette brands for more than 100 million euro. The deal also includes acquisition of Bulgartabac's distribution and retail assets in Bulgaria and within the wider Adriatic region.
Prior to that, BAT purchased the tobacco business of Bosnian company Fabrika Duhana Sarajevo (FDS), including its retail business and tobacco brands, from Austria's CID Adriatic Investments (CID).
Bulgartabac's Bulgarian unit Blagoevgrad-BT became the sole owner of the Banja Luka tobacco company in 2015, after entering its ownership structure in 2013.
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