BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT (3 AUGUST – 10 AUGUST 2007)
Sections/headline briefs:
MACROECONOMY:
· Strabag selling off property in Bulgaria
· Government plans minimum wage hike of 22% next year.
· Private bailiffs' business under fire
· BGN 1m more for Malko Tarnovo - Tsarevo road
· Montupet completes new plant in Rousse
· Major railway project to be completed in 2009
· Bulgaria industry: Cinema City and Ocip plan mall development in Rousse
· EUR 1 bn To Be Invested in Roads Reconstructions for the Next 6 Years
· New type of first-class investors comes
· Sogreah Consultants wins EUR 1.19m contract
· Bulgartabak Sells Tobacco Processing Factory for 1.16 Mln Euro
- Merchants should realize there are no grounds for grain sale suspension:
· Bulgaria Considers Grain Imports to Counter Soaring Domestic Prices
· Trade Unions Call For Urgent Steps Against Soaring Prices
· Bulgarian, Romanian PC Markets Grew Relatively Slowly in 2006 - Researcher IDC
· Bulgarian Shopping Mall Area Under Construction More than Doubles in H1 - Colliers
· Arable land prices to go up by 30% in 2007
· EasyJet to enter Bulgarian aviation market
· Carbones targets 26% increase in 2007 pig iron sales
· Consumer confidence improves 2.7pps y/y in July.
· Bulgaria Restarts Gas Supplies to Greece
· Coca-Cola HBC Posts Double-Digit Sales Growth in Bulgaria, Romania
· Bulgaria Opens Bid for Road and Water Infrastructure Tenders
· Central European Bank gets banks off credit shock by EUR 100 billion
· France BNP Paribas may advise Belene nuke plant investors
INVESTMENTS :
· Bulgaria : German companies to build hydroelectric power plants in Bulgaria
· Bulgaria : FairPlay properties REIT to build hotel complex
- DEGI signs contract for office buildings PVG Tower, Construdava I & Millennium Business Center
· MirLand Development to Invest $60mn in Saratov
· Meinl European Land to purchase a 60,000 sqm shopping centre in Constanta
· Plaza Centers to build �115 million mixed project on Iasitex land
· Bulgaria Opens Water Supply, Road Infrastructure Repair Tenders for 21.6 Mln Euro
· Bulgaria: $ 1 billion to be invested in Bulgarian roads for six years
COMPANIES:
· Bulgaria Quadruples Fine for Wastewater Pollution by Steel Mill Kremikovtzi
· Sopharma's profit up, Bulgarska Roza's shrinks
· KBC takes over Bulgaria’s leading insurer DZI
· Bulgaria finance: Julius Baer purchases 10% stake in insurer Lev Ins
· Sea shipper Navibulgare allowed to sell out non-core, outdated assets.
· Car-parts maker Montupet to start test production in Ruse by end-October.
· Japanese Tokushukai Medical Corp Gets Green Light To Enter Bulgarian Health Insurance Market
· Road construction holding Trace Group presents IPO prospectus.
· Bulgarska Roza swings to loss in H1
· Carlsberg Bulgaria boosts beer sales 34% y/y in H1 volume terms.
MACROECONOMY:
Strabag selling off property in Bulgaria
Strabag's Inzhstroy of Sofia, which was until recently Bulgaria's biggest infrastructural enterprise, will be liquidated, the Pari daily learned. According to knowledgeable sources, Inzhstroy was acquired by the Austrian company quite cheaply, not without the help of one of the former mayors of the city. Strabag's plans to take over most of the larger infrastructural projects in Bulgaria, however, failed. Therefore the company's regional branch decided to sell Inzhstroy's property and pull out of Bulgaria, insiders said. According to them, Strabag has the practice of commissioning projects it has won to subcontractors. It has not carried out a single project by itself.
Government plans minimum wage hike of 22% next year.
PM Sergei Stanishev said during a political forum that the government is planning to raise the minimum monthly wage by 22.2% to BGN 220mn (EUR 112.5) as of next year to avoid higher tax costs for low-income groups as a result of the expected transition to a flat tax rate for personal incomes. The new mechanism with a uniform rate of 10% will replace the current progressive scale featuring a non-taxable threshold of BGN 200mn per month and rates from 20% to 24% for higher income brackets. As far as nearly two-thirds of the employees receive monthly payments below the gross average wage (BGN 384mn per month in Q1), the tax burden would rise for them under the flat rate and the difference would be significant in relative terms for those paid at or near the legally defined benchmark. Stanishev added that the government will also operate a one-off wage hike for low-paid employees in the public sector to keep their net incomes above the levels from last year. The government however will stick with the plan for scrapping the non-taxable income bracket despite protest warnings delivered by labour unions. Stanishev stressed that free lancers will retain part of their preferences for automatic cost deductions from the tax base so that the flat rate will not bring any net income cuts for them. The share of automatic deductions could be reduced to 25% of the gross income from 35% for the main income category at present, but this will still reduce the effective tax burden under the new flat rate of 10%.
Private bailiffs' business under fire
Debt collection rate stands at 30%, according to BCPEA data by Dimitar Grancharov
When debt collection through private bailiffs was introduced in April 2006 it aimed to improve the trust in the judicial system and help reduce the inter-company indebtedness. Private bailiffs were also expected to have a preventive effect on the debtors. Private bailiffs have become victims of various assaults recently, which means that their work has had a certain effect. The car of private enforcement agent Nikolay Zhelev of Dobrich was deliberately set on fire last week. This is becoming a trend provided that seven assaults have been registered on our colleagues over the last nine months, Georgi Dichev, chairman of the Bulgarian Chamber of Private Enforcement Agents (BCPEA) said. Three, four or five years may pass until a lawsuit is closed and a writ of execution is issued. Similar delays force some of the companies to sell their debts but a private bailiff has to be contacted eventually, according to Kamen Kolev, deputy chairman of the Bulgarian Industrial Association (BIA). Inter-company indebtedness in 2006 is expected to be 15% higher compared to 2006, according to Kolev. Private enforcement agents have achieved very good collection rate for the nine months they have been operating, Dichev said. The collection rate in Western European countries stands at 40%, while the figure in Bulgaria amounts to 30%, Dichev added. Some 5-6% of private enforcement agents account for 30% of the overall debts collected, BCPEA data show.
BGN 1m more for Malko Tarnovo - Tsarevo road
The completion of the road linking Malko Tarnovo with Tsarevo in southeastern Bulgaria will cost an additional BGN 1 million, according to Ivan Ivanov, mayor of Malko Tarnovo. The demands of the business and the local population for the opening of the stretch are growing stronger. Thus the intensive traffic of passengers and cargo to and from the border with Turkey will be eased. The stretch was included in the capital programme of Malko Tarnovo municipality and 30 km of road has already been repaired. Some BGN 230,000 have been earmarked for repairs of the fourth-class road network in the municipality.
Montupet completes new plant in Rousse
French car parts manufacturer Montupet has completed its new production plant in Rousse, a report of the company for the second quarter of 2007 shows. The new facility is built on a 20,000 sq. m plot. Trial manufacturing will start in October 2007, while the official opening is scheduled for April 2008. The plant will be capable of manufacturing 230,000, 200,000 and 80,0000 cylinder heads annually for Audi, Renault and Dacia, respectively. Montupet's investment in Rousse amounts to BGN 70 million.
Major railway project to be completed in 2009.
Greece's Terna is ready to complete the first stage of the reconstruction of the Plovdiv - Svilengrad railway line on schedule, transport minister Petar Mutafchiev said. The first and the second stages of the project will be completed in 2008, estimates show. The installation of the signalling and the telecommunication systems of the railway line will be launched simultaneously. Thus the entire project will be completed by 2009. The EUR 340 million investment is the largest infrastructure project in Bulgaria, according to prime minister Sergey Stanishev.
Bulgaria industry: Cinema City and Ocip plan mall development in Rousse
Multiplex cinema operator Cinema City International and construction concern Ocip Group (both Israel) have announced plans to invest �100m to build a large-scale retail, office and entertainment complex in the Danube port city of Rousse. Local construction group Iris is expected to participate in the project. Plans for the complex include 30,000 sq metres of retail space and 20,000 sq metres of offices, with location in the city centre. Construction work is scheduled for completion in 2009. The Rousse complex will be the partners’ third shopping mall development in Bulgaria. The companies earlier built the Mall of Sofia shopping complex and began construction of the Mall of Plovdiv, with combined investments of around �95m. In July, Cinema City and Ocip sold the Mall of Plovdiv project to a group of investors led by the real estate division of financial major GE Commercial Finance (US) and property developer Quinlan Private (Ireland). The purchase price was not disclosed but analysts have valued the deal at �100m. Earlier this year the same investors purchased stakes in Mall of Sofia for an undisclosed sum. Cinema City is the largest operator of multiplex cinemas in central and eastern Europe, with over 500 screens in over 60 locations in Poland, the Czech Republic, Hungary and Bulgaria. The company recently indicated that it plans to expand to Romania following its successful debut on the Warsaw Stock Exchange in December last year. The company also operates Israel’s largest multiplex cinema chain.
EUR 1 bn To Be Invested in Roads Reconstructions for the Next 6 Years
EUR 1 bn will be invested in building and fixing roads in Bulgaria over the next six years, Prime Minister Sergei Stanishev and Transport Minister Petar Moutafchiev said during an inspection of the construction of a railway connecting Plovdiv and Svilengrad. By 2013, the same amount will be invested in Bulgaria's transport infrastructure, according to Focus news agency. About EUR 580 mln will finance railroad infrastructure. About EUR 990 mln will go toward a subsidy for transport programmes, to be spent on road construction and redevelopment. Bulgaria's transport programme has the biggest budget of the seven operational programmes for EU funds. Next year will see the construction of a 10.5km highway between Plovdiv and Asenovgrad. The road between Sofia and Plovdiv will be reconstructed next year. Preliminary estimates say that the 100km road will cost EUR 25 mln.
New type of first-class investors comes
As of now on the state will encourage high value added production, according to the latest amendments to the Investment Encouragement Act, which will come into effect in September. The processing industry and the generation of electricity from renewable energy sources will be encouraged in the industrial sector. Highly technological activities, research and development, education and health-care will be encouraged in the services sector. Tourism, trade, transport, construction and services sectors accounted for the bulk of projects which have received a first-class investment certificate so far, InvestBulgaria Agency data show. These sectors will not receive preferentially state aid as of now on, according to latest amendments. Any kind of project was able to receive a certificate for investment so far. The value of the projects only had to exceed a certain minimum. Projects estimated at over BGN 70 million received a first-class investment certificate, while projects estimated at over BGN 40 million and BGN 10 million received a second and third-class investment certificate, respectively. The minimum value of the new investments will be allowed to be up to twice lower if the project is implemented in underdeveloped regions and in highly technological sectors. Investors that have received a certificate will be able to get shorter administrative terms under the new amendments as well. Certain permits are not issued for years due to red tape at present, according to Rossen Plevneliev, general manager of Lindner Bulgaria. France's Montupet, one of the first investors to get a first-class investor certificate, had to wait for a year and a half to get a construction permit.
Sogreah Consultants wins EUR 1.19m contract
France's Sogreah Consultants SAS has won a EUR 1.19 million contract for Technical Assistance for Preparation of Integrated Water Projects in Stara Zagora. The project should be completed in two years, while funding is secured under EU's ISPA programme, an investment loan from the European Investment Bank and by the Bulgarian government. The Technical Assistance should provide for the preparation of a master plan, feasibility studies, including elaboration of skeleton hydraulic computer models, diagnostic assessment of existing water and wastewater infrastructure.
Bulgartabak Sells Tobacco Processing Factory for 1.16 Mln Euro
SOFIA (Bulgaria), August 8 (SeeNews) - Bulgarian majority state-owned tobacco group Bulgartabak Holding said on Wednesday it has sold 78.27% of its tobacco processing factory Gotse Delchev Tabak for 2.28 million levs ($1.60 million/1.16 million euro). The stake was offered for sale at an auction on the Bulgarian Stock Exchange at a call price of 2.25 million levs and two buyers turned up, Bulgartabak said in a statement. Bulgartabak relaunched the sale of Gotse Delchev and two other tobacco processing factories last month, seeking to earn at least 4.95 million levs. It has lowered the call prices for two of the units - Kardjali Tabak and Yambol Tabak - whose previous sale attempts had failed. The holding group is offering a 90.56% stake in Kardjali Tabak at a call price of 2.1 million levs, and 99.73% of Yambol Tabak at 0.6 million levs, it said in a filing to the Sofia bourse where it is listed. The call prices in the previous tenders were set at 2.5 million levs for Kardjali Tabak, previously named Kardjali BT, and at 0.7 million levs for Yambol Tabak, formerly Yambol BT. Bids for them should be placed by the middle of August, the company said. Bulgartabak, which is 80% state-owned, comprises more than 10 subsidiaries in Bulgaria and several idled units abroad. The group has started preparing the sale of some of its units, including four cigarette factories which are its most valuable assets. The group's privatisation has been delayed for years by political wrangling.
Merchants should realize there are no grounds for grain sale suspension: economy minister
Sofia. Merchants should realize there are no grounds for them to suspend the sale of grain, as that may cause negative results for them, economy and energy minister Petar Dimitrov has said in a comment on the measures taken by the government to control grain rates, a journalist of FOCUS News Agency reported. As for the checks of producers who don’t keep to the announced prices the minister said they will be sanctioned from BGN 300 to BGN 3,000. Kiril Vatev: The state interferes on the market by closing its eyes to smuggled importBG 118881 2007-08-08 13:49:37 Sofia. The state interferes on the market by closing its eyes to smuggled import and irregulated production and by launching the grey sector, Kiril Vatev, member of the Sofia Chamber has said. In his words by encouraging the grey sector the state does not conduct a positive policy, but does the opposite – suffocates normal companies that operate and pay taxes. He gives example with the proposal to let all companies from the food industry that don’t cover European standards work until December 1.
Bulgaria Considers Grain Imports to Counter Soaring Domestic Prices
Economy Minister Petar Dimitrov is to propose to the Cabinet that Bulgaria imports grain to normalise surging domestic prices, the Bulgarian Government said on August 7. The grain shortage, a result of unfavourable weather conditions, will be handled by imports, some from non-European Union member states. Hungary’s contingency stores or imports from Ukraine could be used to counter Bulgaria’s maize shortage, the statement said, according to wire agency See News. Under the EU's intervention system, farmers can sell wheat, barley and maize to publicly funded stores for a fixed price. Bulgaria joined the EU in January. At 400 leva a ton, the price of wheat in Bulgaria is more than double what it was in 2006. A warm winter and unusually dry spring damaged crops in most of South Eastern Europe this year. Other reasons for the price surge in Bulgaria are an increase in consumption, a growing number of foreign tourists and rising European food prices. Agricultural producers in Bulgaria harvested 2.2 million tons of wheat this year, less than expected, and less than last year’s harvest of 3.2 million tons of wheat, according to Bulgarian news agency BTA. About 150 000 tons of wheat remain from the 2006 harvest, an amount that could be enough to meet the country’s demands for food, fodder and seed, the Government said. Bulgaria usually exports large amounts of wheat to the EU.
Trade Unions Call For Urgent Steps Against Soaring Prices
One of Bulgaria's largest trade unions, Podkrepa, has called on the Government to take urgent measures to counteract recent drastic hikes in the prices of goods and services. Trade unions suggested that the Government should unblock state reserve funds to deal with the problem, Bulgarian National Radio reported. Some main food products like bread, diary products, eggs and meat have significantly risen in price in recent days. Discontent from speculative prices will led to social tension, Podkrepa said. Podkrepa said that Bulgarians’ incomes were among the lowest in Europe and people could not cope with the exceptionally high ''European" prices of food products and services. Increases in chicken and egg prices were attributed to high grain prices. Grain price hikes resulted from poor crops, leading to increased demand.
Bulgarian, Romanian PC Markets Grew Relatively Slowly in 2006 - Researcher IDC
SOFIA (Bulgaria), August 8 (SeeNews) - The Bulgarian and Romanian personal computer markets grew relatively slowly in 2006, by 3.5% and 5.9%, respectively, year-on-year, international information technology researcher IDC said. The Romanian PC market proved to be one of the least dynamic [in central and eastern Europe (CEE)], dragging on at a relatively low pace of 5.9% year-on-year in 2006. one of the smaller national markets in CEE, the Bulgarian market was also the least dynamic," IDC said in a statement to SeeNews. PC shipments in Romania totalled almost 644,000 units worth nearly $504 million ($366 million), while shipments in Bulgaria were slightly over 209,000 units worth more than $196 million, IDC said. Although Romania should still be considered a developing market with high growth potential, economic indicators show that the boom phase for the PC market may be coming to an end, though notebooks were still dynamic," IDC said. With almost 60% growth in shipments, notebooks constituted almost a quarter of the total market. By contrast, shipments of desktop PCs declined by more than 3% year-on-year, it added. IDC said the Bulgarian market's slow growth can be attributed to an exceptionally strong 2005, which saw major PC investment in the government and education sector. The marginal annual growth in the Bulgarian PC market was the result of a 14.5% decline in shipments of desktops, which are still the largest factor on the local market. In contrast to the slowing overall market, the notebook segment grew almost 76% in volume to contribute over a third of total market volume. The PC market in Central and Eastern Europe expanded by nearly 23% in volume and almost a quarter in value year-on-year to almost 16 million units valued at over $14 billion in 2006. The booming economy and growing stability in the region were key market drivers, leading to increased disposable income and rising consumer confidence, according to IDC. Russia was the largest market in the CEE region, representing more than 46% of PC shipments in 2006. The Polish market was the second largest, a third the size of the Russian one. Ukraine was third, with less than 10% of the total.
Bulgarian Shopping Mall Area Under Construction More than Doubles in H1 – Colliers
SOFIA (Bulgaria), August 8 (SeeNews) - The gross leasable area of shopping malls under construction in Bulgaria more than doubled in the first half of 2007 to 201,000 square metres, real estate consultants Colliers International said on Wednesday. The shopping mall pipeline increased by 138,500 square metres from January to June, which makes retail the most dynamic commercial real estate sector in Bulgaria, Colliers said in a report. Six malls currently operating in Bulgaria have a gross leasable area totalling 105,500 square metres, the consultancy said. Three of them are located in the capital, Sofia. Various domestic and foreign investors said they would launch the construction of shopping malls in Bulgaria's biggest cities over the last year. They are relying on the rising incomes of the population of 7.7 million people, shadowing the growth of the domestic economy of the new European Union member. Gross domestic product increased by over 6.0% in each of the past three years. "Except for a few schemes with poor concept design, all major shopping centres enjoy full occupancy," Colliers said. It said Bulgaria's third biggest city of Varna had attracted many investors "and is shaping up as a very competitive market with five projects within a one-kilometre radius". The Black Sea city attracts many Romanians, who go shopping during their summer holidays. Many citizens of Bulgaria's northern neighbour, which also joined the EU in January, have chosen Bulgaria's coast as a holiday destination. In terms of prices, high street locations in Sofia had rates ranging between 20 and 125 euro ($172) per square metres per month versus 30 to 55 euro per square metres monthly in the shopping centers and malls. Colliers said high class office space in Sofia increased by 10% in the first half of the year to 606,500 square metres. The overall vacancy rate remained unchanged at 5.1%, it said, but might increase in the future as there are over 330,000 square metres of high class office space under construction in the suburban areas. Colliers said industrial real estate was shaping up as an attractive segment in the eyes of developers with various projects under construction or in the final stages of planning. "This will over time change the current disproportional share of owner-occupied and build-to-suit space on the market," the consultancy added.
Arable land prices to go up by 30% in 2007
Agricultural land prices are expected to go up by 30% in 2007, Georgi Georgiev, chairman of the Bulgarian association of agricultural land owners, said. The figure would represent a nearly double increase compared to the 18-20% growth rate registered in 2006. The prices have gone up by 15-20% in the first half of 2007, the association said. The average price of arable land ranged between BGN 220 and 270 per 1,000 sq. m in July, compared to BGN 200-240 in January.
EasyJet to enter Bulgarian aviation market
Europe's largest low-cost air easyJet will start servicing flights three times a week from the Sofia airport to London's Gatwick as of November 6, the company said. No other low-cost carriers have declared intentions to service flight to and from Bulgaria during the autumn season, Zahari Aleksiev, general director Bulgaria's Civil Aviation Administration, told the Pari daily. The one-way ticket will be priced at EUR 33.99, while a return ticket will cost EUR 75.77.
Carbones targets 26% increase in 2007 pig iron sales
Austria-based distributor Carbones GmbH expects to sell more than 220,000 tonnes of merchant pig iron in 2007, a 26 percent increase on its 2006 total. Carbones made its 2006 target of selling 174,000 tonnes of pig iron in 2006, itself a 67 percent rise on the 104,000 tonnes sold in 2005. Carbones sold 134,000 tonnes of pig iron in the first half of 2007. Carbones was founded at the end of 2002 by Jurriaan Hovis, who started the company after selling his non-ferrous trading business Hovis GmbH to MFC Bancorp. It also trades small amounts of aluminium alloys and scrap, anthracite and coke. Over 50 percent of Carbones` total pig iron sales are made to Central and Eastern Europe. It is active in Poland, Czech Republic, Slovakia, Hungary, Slovenia, Croatia, Serbia, Bulgaria and Romania.
"We have been successful in building up our business in these countries often in areas where cash liquidity and thefts are an issue and where there are few other legitimate operators. We are the number one pig iron distributor in Central and Eastern Europe today," Hovis added. Carbones is recruiting new sales staff for Romania, Italy, UK and adding a second person in Germany. The company gets most of its pig iron from Russian merchant producers Tulachermet, Kosaya Gora, Svobodny Sokol and Chusovoy. Carbones sells more than half of is material to foundry customers but also makes deliveries to European steelmakers.
Consumer confidence improves 2.7pps y/y in July.
The composite consumer confidence indicator improved by 2.7pps to -31 in July, according to the survey of the statistical institute run once in three months. The indicator however deteriorated significantly from -25.5% in the previous reports for April this year due mainly to food price hikes driven by unfavourable weather conditions and significant drops in agricultural supplies. Consumer sentiments remained largely negative for the whole period of transition to a market economy despite the steady economic growth booked since 1997. Moreover, demand indicators such as retail sales, household consumption, sales of cars and fast moving consumer goods have been rising at very steep rates in the past several years but this has not changed the pessimistic responses in the consumer surveys. Apart from the general explanations referring to national psychological characteristics, the negative consumer confidence indicator is also based on rising income disparities, widening share of pensioners, and possible disproportions of the survey’s sample to low-income categories. The study in July however shows a significant increase in inflationary expectations, which is apparently a consequence of the weak performance of the farming sector and its low technological capacity to offset negative weather effects.
Bulgaria Restarts Gas Supplies to Greece
SOFIA (Bulgaria), August 9 (SeeNews) - Bulgaria has resumed regular gas supplies to Greece after a three-day halt following an explosion on the transit pipeline on Monday, Bulgaria's state news agency BTA reported on Thursday. The supplies to neighbouring Greece were restarted after the pipeline was fixed, BTA. The quantity of gas currently flowing through the pipeline was not specified. No Bulgargaz officials were currently available to comment. A blast at Dolno Balgarchevo village near the southwest city of Blagoevgrad halted Bulgaria's gas transit to its southern neighbour, but Bulgarian authorities have not yet identified reasons for the explosion. Greece said it was not affected from the halt, as it could cover lower summer demand with reserves of liquefied gas. State-owned Bulgargaz transits gas from Russia's gas export monopoly Gazprom to Turkey, Greece and Macedonia.
Coca-Cola HBC Posts Double-Digit Sales Growth in Bulgaria, Romania
SOFIA (Bulgaria), August 9 (SeeNews) - Greek-based Coca-Cola Hellenic Bottling Co (HBC) on Thursday reported a double-digit growth of its sales volumes in Bulgaria and Romania and a strong rise in operating profit in the first half of 2007. The company said in its half-year report its sales in unit cases in the emerging markets increased to 453.2 million from January to June 29 from 384.5 million a year earlier. The emerging markets on the list are Armenia, Belarus, Bosnia and Herzegovina, Bulgaria, Macedonia, Moldova, Montenegro, Nigeria, Romania, Russia, Serbia and Ukraine. Coca-Cola HBC provided no country breakdown. "Profitability in Romania and Bulgaria grew strongly as we successfully adapted our business to the positive market environment arising from the recent accession of these countries to the European Union," the report said.
Black Sea neighbours Bulgaria and Romania joined the EU in January. Soft drinks sales in both countries have grown over the last few years, shadowing a rise in the personal incomes of their citizens. Coca-Cola HBC said its earlings before interest and tax (EBIT) in the emerging countries increased to 131.7 million euro ($181.1 million) from 90 million euro. Net sales revenue grew to 1.223 billion euro from 979.7 million euro. Coca-Cola HBC is the world's second largest bottler of Coca-Cola products.
Bulgaria Opens Bid for Road and Water Infrastructure Tenders
Bulgaria's Regional Development Ministry on August 8 opened the bidding on 22 lots of EU-funded road and water infrastructure projects. The projects are worth a total 21.6 million euro, according to wire agency SeeNews. The EU will provide 16.2 million euro for the projects, which are aimed to improve infrastructure in towns with potential for tourism, the ministry said. September 18 is the deadline for interested companies to file bids for 10 lots in several towns across Bulgaria. The projects will include repairing water supply networks and linking waste waters with treatment plants. September 19 is the deadline for the 12 lots for road reconstruction projects.
Central European Bank gets banks off credit shock by EUR 100 billion
Sofia. Yesterday was marked by the biggest crisis for the last six years. The crisis on the world stock exchange markets with the American mortgage credits finally burst out in Europe and ECB was forced to perform a rescue operation by allotting EUR 100 billion with the preferential interest rate of 4%. 49 banks immediately took the unprecedented EUR 94.8 billion (USD 130.2 billion). Over the next day it will become clear whether this operation will stabilize the situation. The shock in credit sector affected the stock exchange markets from Russia to Brazil due to embarrassment whether the capitals will go away from the riskier regions. As a result the prices of petrol and gold went down. As for Bulgaria, Levon Hampartzoumian, CEO of UniCredit Bulbank and Chairman of the Executive Board of the Association of the Bulgarian Banks, said for Dnevnik : “ This crisis will scare away some of the investors from the Bulgarian real estates market. This, in addition with the global tendency for raise of the interest rates, will make the financial instruments more attractive and a drop in the prices of estates”. He adds that a drop of 15-20% is not going to lead to a crisis, because the only investors who will go away are those looking for estates with investment purpose, not those who buy estates for residence. This will limit the drop. Chief Financial Officer of Postbank Petya Dimitrova said that this crisis will cause trouble on the macro lavel, but will not affect Bulgaria. “It was clear that these American mortgage credits are risky, while ours are not”, she said Second social security fundBG 119000 2007-08-10 03:06:04 Sofia. DSK – Rodina will have the opportunity to manage a second social security fund, Monitor reads. DSK – Rodina is one of the major shareholders in DSK Bank. The permission for management of the new social security fund was issued by Biser Petkov, deputy director of the Commission for Financial Supervision.
France’s BNP Paribas may advise Belene nuke plant investors
France’s BNP Paribas, tapped by Bulgarian national power grid operator NEK to provide financing for the construction of a new 2,000MW nuclear power plant (NPP) at Danube town of Belene, is in talks with candidates for the position of Belene strategic investors to advise their likely participation in the procedure, said sources close to the project. The BNP Paribas office in Sofia neither confirmed nor denied the information. NEK has shortlisted six companies in the procedure to select an investor for an up to 49% stake in the Belene project. Italy’s Enel, CEZ of the Czech Republic, Germany’s RWE and E.ON, France’s EDF and Belgium’s Electrabel will each receive a copy of the information memorandum, spelling out the rights that will be enjoyed by the private investor in the power station and the rules for its management. The shortlisted candidates will be able to draft a legal analysis of the project by October 1. According to unofficial sources, the advisory talks are at a most advanced stage between BNP Paribas and Enel. The French bank has asked NEK if providing advisory services to some of the candidate investors could be perceived as a conflict of interests. NEK reported replied that there would be no conflict of interests if the advisory and loan syndication services were to be provided by two different BNP Paribas teams. Enel declined to comment on whether or not it is engaged in talks with BNP Paribas. The BNP Paribas loan will finance the design, equipment delivery, construction and assembly costs for the first year of the Belene project. The construction of the Belene NPP, estimated at around EUR 4 bln, has been commissioned to Russia’s AtomStroyExport. The final agreement for implementation of the project is expected to be signed before the end of 2007.
INVESTMENTS :
Bulgaria: German companies to build hydroelectric power plants in Bulgaria
German companies are interested in constructing hydroelectric power plants in Bulgaria. The German PetroCarboChem SE (PCC SE) and the German Investment and Development Company have founded a joint venture that plans the construction of about 30 hydropower plants in Bulgaria, Bosnia and Herzegovina and FYROM. The planned investment amounts to a total of EUR 80 mln (USD 109.55 million), 15 (USD 20.54 million) to 20 mln (USD 27.39 million) of which will go to Bulgaria. The plants capacity will be of 45 MW and will supply 20 to 40 thousand households with electricity in Bulgaria. Electricity produced this way will reduce the emissions of carbon dioxide by 150 thousand tons, according to calculations of the PCC SE. Together with the Bulgarian authorities they are trying to regulate the standards as defined by the World Bank. About 3200 people work for PCC SE and the companys annual turnout is about EUR 879 mln (USD 1.20 billion).
Bulgaria: FairPlay properties REIT to build hotel complex
FairPlay Properties REIT starts the implementation of a new project for construction of a complex of hotel and holiday apartments in the Panichishte resort as the investment value is envisaged to reach BGN 50 (USD35.0397). In result of the won competition, organised by the municipality of Sapareva Banya, the company has acquired a landed property of 25,611 sq. m. and price of BGN 2,561,100(USD2 million) . The project is not only unique because of its location but also because of the fact that FairPlay Properties REIT has worked out a special Plan for Recovery Protection of Environment and a Plan for Investment of Infra-structure importance to the Municipality of Sapareva Banya. In pursuance with the terms and conditions of the competition and with the adopted by the municipality conceptual investment and architectural design, a complex comprising 31,796 sq. m. unfolded built-up area will be constructed on the property.
DEGI signs contract for office buildings PVG Tower, Construdava I & Millennium Business Center
Deutsche Gesellschaft Fьr Immobilienfonds M.B.H - DEGI - the investments unit of German group Allianz, has signed a purchasing contract for class A office buildings PVG Tower, Construdava I and Millennium Business Centerowned by European Convergence Property Company, an investment fund administered by Charlemagne Capital. PVG Tower, Construdava I and Millennium Business Center are 100% rented The transaction, with a total value of more than �110 million, evolved under the form of stocks purchasing. EURISKO provided consultancy for Deutsche Gesellschaft Fьr Immobilienfonds M.B.H through Radu Lucianu – a EURISKO partner - and Florin Tirla - corporate account manager at Eurisko. PVG Tower, Construdava I and Millennium Business Center were bought by the British company Charlemagne Capital in February - July 2006. “In 2006, Charlemagne Capital, through its investments fund European Convergence Property Company, bought Millennium Business Center with the support of EURISKO Company, too. Deutsche Gesellschaft Fьr Immobilienfonds M.B.H - DEGI intended to enter the Romanian market and chose EURISKO as a consultant during the entire duration of this process. In February this year, there were initiated the negotiating procedures and papers elaboration. After only six months, we are able to announce we buttoned up the transaction,” said Radu Lucianu, a EURISKO partner.
MirLand Development to Invest $60mn in Saratov
MirLand Development said last week it has launched a new retail and entertainment project in Saratov, with the developer planning to invest around $60m into the project. MirLand Development Corporation Plc. is a real estate development company incorporated in 2004 and operating solely in Russia. The company is controlled by the Fishman Group, an international real estate investment and development group based in Israel with over 30 years' experience in the real estate development market. Other participants of the project include EBRD (finance), Norman Asset Management (project manager), Pelleg Architects Company (architect), Danya Cebus (general contractor). Jones Lang LaSalle is the exclusive leasing agent for the project. The ongoing Property Manager is still to be appointed and will be, according to the developer, an international professional. The project has a city center location, at the intersection of Astrakhanskaya str. and Kutyakova str. The project’s GBA is 58,000 sqm. GLA is 28,888 sqm. The center’s infrastructure will include a supermarket (4,710 sqm), white& brown store (2,190 sqm), a children’s goods department store (1,304 sqm), and a multiplex cinema (5,000 sqm). The complex has parking for 500 cars. Construction started on July 1st, 2007 and the opening is planned for the second quarter of 2009.
Meinl European Land to purchase a 60,000 sqm shopping centre in Constanta
Meinl European Land AG has signed contracts to purchase a 60,000 sqm shopping centre in Constanta on Romania's Black Sea coast. A total of some �130 million will be invested in the shopping centre, the Austrian real estate development company said in a statement. Meinl also said contracts for seven more projects worth �400 mln and involving retail and commercial sites in various Romanian cities are closed to being signed.
Plaza Centers to build �115 million mixed project on Iasitex land
Developer Green Plaza, controlled by Plaza Centers and part of Israeli group Elbit, has recently bought 4.6 hectares of land from Iasi-based textile factory Iasitex, on which it plans to build a �115 million mixed project, Plaza Centers announced. The developer is looking at building 54,000 sqm of retail, 15,000 sqm of offices and 1,600 parking places. Another 70,000 sqm, suitable for residential land, could be sold to another investor. The project could be finished by 2010, according to the developer. The company offered the plot for bidding last week and the buyer paid at least �21 million, which was the starting price, local media reports. Iasitex hasn’t disclosed the amount paid by Green Plaza. Two other companies, as well as Iasi-based businessman Iulian Dascalu, owner of Iulius Group, have also stated interest in the land. Dascalu, however, has withdrawn from the race. The 4.6-hectare plots account for some 40% of the Iasitex-owned land. Plaza Centers controls 75% of the Dambovita Center mixed-project in Bucharest. Plaza Centers has also announced plans to invest some �100 million in mixed projects including a shopping center, offices and a hotel in Timisoara, as well as development plans for Miercurea-Ciuc.
Bulgaria Opens Water Supply, Road Infrastructure Repair Tenders for 21.6 Mln Euro
SOFIA (Bulgaria), August 8 (SeeNews) - Bulgaria's Regional Development Ministry on Wednesday invited bidders for 22 lots of EU-funded road and water infrastructure projects worth a total of 21.6 million euro ($29.7 million). The projects, for which the EU provides 16.2 million euro, are aimed to enhance the road and water supply infrastructure of towns with potential to develop tourism, the ministry said. Interested companies can file bids by September 18 for 10 lots in several towns across Bulgaria, to repair water supply networks and link waste waters with treatment plants. The deadline for the other tender, divided into 12 lots for road reconstruction, is September 19. The ministry said it would shortly call separate tenders for supervisors of the two projects, but quoted no date.
Bulgaria: $ 1 billion to be invested in Bulgarian roads for six years
$ 1 billion are going to be invested in road construction and reconstruction over the next 6 years. By 2013 as much will be invested in Bulgarias transport infrastructure. This was announced yesterday when PM Sergey Stanishev and Transport Minister Petar Mutafchiev inspected the construction of a railway connecting Plovdiv and Svilengrad. $ 798 mln will go for railroad infrastructure.
COMPANIES :
Bulgaria Quadruples Fine for Wastewater Pollution by Steel Mill Kremikovtzi
SOFIA (Bulgaria), August 6 (SeeNews) - Bulgaria said on Monday it more than quadrupled, to 24,377 levs ($17,200/12,500 euro), the monthly fine which the largest steel mill in the country, Indian-owned Kremikovtzi, has to pay in 2007 for polluting wastewater. The content of harmful substances in the wastewater released in the plant's production cycle exceeds the levels for which Kremikovtzi was levied a monthly fine of 5,538 levs in 2006, Bulgaria's Environment Ministry said in a statement. The higher fine goes into force as of March 13, 2007 when Bulgaria's environment watchdog found excessive levels of harmfuls substances in the plant's wastewater. Kremikovtzi said earlier this year it would invest $160 million (116 million euro) in environment protection programmes in 2007. The plant plans to raise its output of finished products to 1.6 million tonnes this year from 1.2 million in 2006. A further rise to 2.0 million tonnes is projected for 2008. Indian steel maker Ispat Industries, through its subsidiary Global Steel Holdings Limited (GSHL), acquired the owner of 71% of Kremikovtzi, Finmetals Holding, for an undisclosed sum in August 2005. Shares in the company ended 3.03% lower at 16.00 levs on Monday on the Bulgarian Stock Exchange as only 359 stocks were traded. The statement was released after the end of the bourse session.
Sopharma's profit up, Bulgarska Roza's shrinks
The profit of Bulgaria's Sopharma for the first half of 2007 increased by 35%, year on year, to BGN 19.152 million at the end of June. Compared with the first quarter of the year, the pharmaceutical maker's positive financial result jumped by nearly 131%.
Sopharma's total operating revenue for the first half of the year rose by more than BGN 6 million, while expenses went up by just 1.546 million. Unlike its majority owner, Bulgarska Roza Sevtopolis reduced its six-month profit by BGN 1.012 million to BGN 650,000.
KBC takes over Bulgaria’s leading insurer DZI
Sofia. Belgian banking and insurance group KBC wrapped up a EUR 185 million deal for a majority stake in Bulgaria's leading insurer DZI Insurance, it said on Friday, quoted by news agency Reuters. KBC finalised the deal to buy 70% in DZI after it received all regulatory approvals. It said it would soon launch a public takeover bid for the outstanding shares. It has said the buyout offer will be for EUR 79 million.
Bulgaria finance: Julius Baer purchases 10% stake in insurer Lev Ins
Local media report that private banking and investment group Julius Baer (Switzerland) has purchased a 10% stake in local general insurer Lev Ins for around Lv35m (US$24.6m). Lev Ins earlier announced plans to launch an initial public offering (IPO) of shares on the Bulgarian Stock Exchange. The company is one of the main players on the local auto insurance market and holds around a 6.5% share of the general insurance market in the country. In July Julius Baer raised its stake in diversified holding Chimimport from 2.7% to nearly 6.7%, via share purchases on the Sofia bourse, for around Lv67.5m. Chimimport is Bulgaria’s largest holding group with equity stakes in more than 40 local companies.
Sea shipper Navibulgare allowed to sell out non-core, outdated assets.
The ministry of transport approved the request of the state sea shipping company Navibulgare for selling out non-core and outdated asserts in the course of the ongoing privatisation tender. The operation is expected to improve the cash flow of the company that could also have a favourable effect on the price of the 70% stake offered to private investors. Navibulgare will hold close-bidding auctions for three real estates, two ships, and more than 1,500 containers. The privatisation procedure for Navibulgare started on Jun 25 following the line strategy approved by the parliament in mid-March. Companies and consortiums interested in the tender will be able to purchase tender documents by Aug 20 and to submit participation requests by Sep 10. Three Greek investors are reportedly interested in the tender -- Attica Group, Avin International, and Tsakos Group.
Car-parts maker Montupet to start test production in Ruse by end-October.
The French car parts manufacturer Montupet has completed the construction phase of its project in the Danube city of Ruse and plans to launch test production by the end of October while regular production is scheduled to start in April next year, reads the company report for H1. The project has already entered the phase of supply and installation of equipment in the newly built industrial building. The total investment is estimated at EUR 36mn. The French company will produce aluminum wheels for European carmakers such as Audi , Dacia , Peugeot-Citroen, Renault, and others. The industrial zone in Ruse provides convenient ties to Romanian-based facilities of Renault and Dacia as well as cheap transport links to Central Europe and neighbouring Turkey . The local unit of Montupet will hire around 500 workers in the initial phase of production with options for boosting the total employment to 1,500 in about 3 years.
Japanese Tokushukai Medical Corp Gets Green Light To Enter Bulgarian Health Insurance Market
SOFIA (Bulgaria), August 8 (SeeNews) - Tokushukai-Sofia, a subsidiary of Japan's Tokushukai Medical Corporation, on Wednesday received the green light to operate on the Bulgarian health insurance market. The Financial Supervision Commission (FSC) said it licensed Tokuda Zdravnoosiguritelen Fond, in which Tokushukai-Sofia has a 80% stake. In Bulgaria Tokushukai Medical Corporation also runs the Tokuda Hospital Sofia medical centre and Tokuda Bank. Bulgaria is considering reforms in its inefficient health sector, including the sale of hospitals and ending the monopoly of the state-run health insurance fund. The new European Union member with 7.7 million people has 13 licensed health insurance companies, which collect only voluntary health insurance contributions.
Road construction holding Trace Group presents IPO prospectus.
The local engineering and roads construction holding Trace Group has submitted to the securities commission a prospectus for operating a 10% capital hike and floating the newly issued shares on the local bourse. The new equities will be offered at a fixed price of BGN 110.5 per unit that would place the company’s market capitalisation at BGN 243mn (EUR 124mn). Trace Group has establishments in 8 cities of the country and works on a number of state financed projects. The sales of the holding are reported at BGN 130mn for last year and expected to exceed BGN 150mn this year. The profit-to-sales ratio is projected at 6.5% this year and 12.5% next year.
Bulgarska Roza swings to loss in H1
Bulgarska Roza of Karlovo posted BGN 35,000 loss for the first half of 2007, compared to BGN 26,000 profit booked for the year-ago period. The total revenue of the company went up by BGN 1.344 million to BGN 3.039 million. The increase may be put down to the strong sales revenue of the company, which totalled BGN 2.919 million in the first half of 2007, up 84% year on year. A total of 48 shares in the company changed hands on the Bulgarian Stock Exchange on Thursday at an average price of BGN 36.16 per share. The stock appreciated by 5.7% on the day. The market capitalisation of the company has increased by more than 90% over the last year. Stara Planina Hold (38%) and Maritsa Hold (11%) are major shareholders in the Bulgarska Roza.
Carlsberg Bulgaria boosts beer sales 34% y/y in H1 volume terms.
The two local breweries of Carlsberg raised their sales by 34% y/y to 69mn litres in H1, the management of the company unveils. The whole beer market expanded by 16% for the same period. Carlsberg Bulgaria estimates its market share at 25%. The country’s major brewer Zagorka has captured 30% of the market in H1. Carlsberg Bulgaria ranked third trailing marginally behind the second biggest player Kamenitsa, which covered 26% of the market. However, the aggregated market data do not cover sales of two small local brewers that are not members of the line professional association.