BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 15 - 22 JANUARY 2010 )
Sections/headline briefs:
MACROECONOMY:
· Chinese companies to build solar plant in Bulgaria
· Bulgaria may lose billions of euro of investment if it fails to adopt clear rules in renewable energy sector
· Finance ministry expects utilisation of EUR 363 M EU funds in January
· EUR 500 М ISPA funding hangs by a thread for Bulgaria
- Bulgaria promotes itself as all-year Slovak holiday destination
· Bulgaria export, tourism hit hard by Greek border blockade
· Bulgaria's PM promotes economic adviser to Cabinet
· Heritage Foundation and The Wall Street Journal: Bulgaria deteriorates in terms of economic freedom
· Moody's: Bulgaria becomes the most successful country in fighting economic crisis
· Bulgaria's unemployment rate among lowest in EU
· Lyulin Highway to be completed by end-2010, contractor says
· Drug maker Sopharma boosts foreign sales in 2009
INVESTMENTS:
· Bulgarian business demands foreign investors
· Bulgaria's Enemona to design PV systems worth EUR 18.6 M for local buyer
· EBRD announces loan to support Bulgaria wind farm project
· Bulgaria FDIs collapsed to EUR 2.6 B 2009
· Bulgarian mineral fertiliser maker Novo Chimco to invest EUR 35 M to relaunch production
COMPANIES:
· Bulgarian steelmaker acquires majority share in Danube port
· Bulgarian firms seek loans to snap up impaired assets
· Nord Holding to recycle used cars, household appliances
· Bulgarian watchdog allows Orbitel acquisition by Spectrum Net
· Bulgaria’s road agency locks up EUR 150 М for companies
· Bulgaria’s Slantcho, Varna Plod scoop up sweeter sales
· Carlsberg Bulgaria to scale up Bulgarian business
· Advent International may invest EUR 150 M in CEE countries this year
THE CRISIS:
· Crisis pummels Bulgaria’s ferrous metals
Articles:
MACROECONOMY:
Chinese companies to build solar plant in Bulgaria
Two Chinese companies, Polar Photovoltaics and Wiscom, have proposed to invest USD 7 M to build a 2 MW Photovoltaic plant near Ihtiman, 40 km south from Bulgarian capital Sofia.The two companies and their Bulgarian partner SunSERVICE presented their proposal to the Ihtiman municipality on Wednesday."It is our first investment in a European Union country and we carefully selected the best place for it," Jim Su, Chief Marketing Officer at Polar said."Our region has high unemployment rate, so investors here are exempt from profit tax," said Margarita Petkova, Mayor of Ihtiman.Chinese investors and their Bulgarian partner expect to sign a contract with the local authorities in the next few days and to build the plant in seven months."We decided to invest in Bulgaria, in Ihtiman municipality in order to prove our ability to deliver the main product, the PV- generator based on unique Chinese technology together with a proper financing scheme, so we can have an excellent operating PV- power plant under challenging conditions," Xu Bing from Polar-Wiscom told reporters.
Bulgaria may lose billions of euro of investment if it fails to adopt clear rules in renewable energy sector
Bulgaria risks losing billions of euros of investment in renewable energy capacities if it fails to quickly adopt clear rules for the sector's operation, industry and government officials say. Slack control in the sector, whose huge potential has attracted crowds of investors over the past years, threatens to undermine its future development. The huge number of projects for new generation capacities causes fears that the country's power grid will not be able to support them, and gives rise to environmental concerns. In an attempt to put things under control, the government has said it will impose a temporary ban on new projects until it works out a set of new rules. Too many wind and solar projects have been announced, most of them are unrealistic and the authorities and grid operators are unable to filter out unrealistic projects which hinders reliable planning for all parties," Sebastian Noethlichs, managing director of German energy company n-vision energy, told SeeNews on the sidelines of a recent public discussion on the development of the sector organised by the Confederation of Employers and Industrialists in Bulgaria (CEIBG). So far, 12,000 megawatts (MW) of solar and wind capacities have received environmental approval. Bulgaria's power grid operator NEK and the electricity distributors have received requests for connecting to the grid 112 wind farms with an installed capacity of 8,950 MW and of 33 solar parks with an installed capacity of 1,898 MW, Kostadinka Todorova, an energy efficiency and environmental protection expert with the energy ministry, said during the discussion. According to CEIBG, the most which the country can take is 1,000 MW of solar capacities and 1,000 MW of wind capacities. In financial terms, these are three-four billion euro ($4.3-$5.7 billion) [of investments] in the next three years," CEIBG head Ivo Prokopiev said, adding that the money is particularly needed in times of plunging foreign direct investments and absence of domestic investments. A two-step filter of projects needs to be introduced, according to Noethlichs. First, a technical filter should be applied in the early stage of a project to check if the investor has carried out an assessment of the wind and solar power generation potential of the site of a future wind or solar park. The second filter should be a financial one, as investors should be required to present a bank guarantee whose size will depend on the size of their investment. This filter should be applied at a later stage, Noethlichs said, adding that the investors should be returned their guarantee at the start of the construction of the electricity-generation capacities. Noethlichs called on the authorities to review the existing projects and check for possible irregularities over the next six months. Should any irregularities be found, the authorities may seek to revoke the relevant permits." It's a fact that the system has been functioning in an unsustainable way," Energy Minister Traycho Traykov said during the discussion. According to Traykov, the current state of the sector is directly connected with the crisis that has hit the real estate sector. After a number of real estate projects failed to happen, investors are converting the vacant land plots to sites for renewable energy projects, he explained. There is an enormous speculative element, the system is under pressure," Traykov said. A solution to this problem will be sought in the preparation of a strategy for the development of the sector by 2020. The document should be adopted by the middle of the year or in August at the latest, Traykov said. This strategy will map out the areas where renewable energy projects can be developed. Until then, a temporary ban on all new projects will be introduced. Levon Hampartzoumian, CEO of the country's largest lender by assets, UniCredit Bulbank, too warned of oversaturation in the renewable energy sector similar to the one that the real estate sector is experiencing. To avoid seeing the energy equivalent of Slanchev Bryag and Bansko," projects should be carefully sifted, Hampartzoumian said. Slanchev Bryag, also known as Sunny Beach, and Bansko are two of the most popular resorts in the country where massive over-construction in the past years has led to a drastic drop in real estate prices. Sifting is possible if the investor demonstrates his material interest and contributes own funds," according to Hampartzoumian. Despite the problems that need to be addressed, industry officials remain optimistic. The renewable energy sector has a huge potential for domestic growth and exports of technologies for neighbouring markets, according to Prokopiev. The existence of clear rules, of a clear strategy [] should guarantee that the best ones win," Prokopiev said. The renewables sector is one of the few anti-cycling sectors which can be a driver of economic growth." The sector's development in Bulgaria gained momentum following the country's entry in the European Union in 2007. Bulgaria must cover 11% of its gross domestic energy consumption with electricity from renewable energy sources by the end of 2010, compared to less than 10% now, and should increase this share to 16% by 2020. The country had 330 MW of installed wind farm capacities and three megawatts of solar plants at the end of 2009.
Finance ministry expects utilisation of EUR 363 M EU funds in January
The finance ministry expects the utilisation of BGN 710mn (EUR 363mn) of EU funds, including national co-financing, in January, a note on its website reads. The funds under the pre-accession programmes and the operational programmes, co-financed by the EU structural and cohesion funds, is expected at more than BGN 350mn in January as compared to BGN 31.8mn a year earlier and BGN 141.6mn in December. The amounts under the EU agricultural and fishery funds are to reach total of BGN 360mn as compared to BGN 466mn in December and less than BGN 1mn in January 2009. Meanwhile, the director for Bulgaria at the Directorate General for Regional Policy J.M. Seyler, who visited the country last week, stated that the preparation and execution of the big infrastructure projects especially under the transport and environment operation programmes are being delayed, which puts at risk the EU funds utilisation. Seyler recommended acceleration of the utilisation rate and strengthening of the national control over the usage of EU funds. At the same time, regional policy director general Dirk Ahner has sent a letter warning that the financing under the environment operational programme may be blocked unless the environment ministry provides measures to secure effectiveness of the projects by the end of this month.
EUR 500 М ISPA funding hangs by a thread for Bulgaria
Bulgaria is facing losing European financing if infrastructure projects worth at least EUR 500 million under the Ispa pre-accession programme are delayed or not implemented. According to figures of the country’s Finance Ministry, 46% of the scheme’s EUR 1.66 billion cash pot has been absorbed so far. EU data puts the percentage at 36%. The programme closed at the end of this year. Almost all water projects financed under Ispa with a combined price tag of roughly EUR 300 million are in the balance, said deputy environment minister Ivelina Vasileva. She admitted a portion will have to be provided by the state budget but the amount could be specified after negotiations with Brussels. The railway linking Plovdiv and Svilengrad, both in the south, is another Ispa-funded project that will not be completed by the end of the year, said Bulgaria’s EU funding secretary Yuliana Nikolova. only EUR 94 million of the project’s EUR 340 million total cost has been paid as at January. The European Commission's director-general of the regional policy DG Dirk Ahner warned that unless Bulgaria’s Ministry of Environment outlines the set of measures to enhance efficiency of infrastructure projects financed under the regional development programme, the total financing will be suspended. Karadjova pledged the reply would be submitted be the end of January. She added the ministry has implemented measures on the 18 troubled projects estimated at BGN 344 million put together.
Bulgaria promotes itself as all-year Slovak holiday destination
Bulgaria will present its national pavilion at the ITF "Slovakiatour" International Tourism Exhibition and Fair 2010, where the country will promote itself as a destination for year-round tourism in Slovakia.ITF Slovakia Tour is the most important tourist trade event in Slovakia and one of the most prestigious events of its kind in Europe. This year, it will take place between January 21 – 24 in Bratislava.The majority of Slovak tourists to Bulgaria have traditionally visited the Black Sea resorts. The first nine months of 2009, however, registered a drop of 47% in numbers year-on-year.Ivo Marinov, Deputy Minister of Economy, Energy and Tourism will attend the opening of the Bulgarian stand.During his stay in Slovakia, Marinov will meet with Pavol Krištof, Slovakia's Deputy Minister of Economy, to discuss new opportunities for enhancing cooperation in economy, energy and trade between the two countries.Despite traditionally good relationships, Slovak imports to Bulgaria decreased during the first half of 2009 due to global economic crisis.Trade exchange for the first nine months of 2009 was over EUR 202 M, but the decline was more than 12% compared with the same period of 2008.Bulgarian exports to Slovakia comprise of cables, rolled products, food, oil, and raw metals, while imports include TV and household appliances, paper, medicines and cars.
Bulgaria export, tourism hit hard by Greek border blockade
The composite daily losses incurred to the Bulgarian economy by the blockade of the border with Greece by protesting Greek farmers is about EUR 3 M.This has been announced by Bulgaria’s Economy Minister, Traicho Traikov, who met Wednesday with the Greek Ambassador to Bulgaria, Her Excellency Danae-Magdalini Koumanakou.Traikov said the Greek authorities were currently discussing the options it could offer to the protesting farmers who demand higher prices for their produce.He explained that the Bulgarian government was going to await the position of the Greek government before it resorts to “Plan B” - i.e. filing a complaint with the European Commission and asking for compensations.According to the crisis headquarters of the Bulgarian government – which includes officials from three Ministries – Economy, Transport, and Agriculture, the total daily loss for the Bulgarian economy from the blockade is about EUR 3 M.The losses from failed export are some EUR 2,5 M per day. This includes about EUR 1 M daily loss from the inability to export Bulgarian agricultural products to the Greek market. The termination of the imports from Greece is also important as it can lead to price hikes of certain goods in Bulgaria such as citrus fruits.Bulgaria’s tourism sectors loses about EUR 500 000 daily from the terminated from of Greek tourists, according to data from the towns of Bansko and Sandanski which have seen the number of Greek visitors drop tenfold since the start of the blockade.Bulgarian transport firms are losing some EUR 150 000 daily from having their trucks stuck at the border, according to the Auto Administration Agency and the branch organizations.
Bulgaria's PM promotes economic adviser to Cabinet
Prime Minister Boiko Borissov will appoint his current economic adviser Ilian Mihov to the Cabinet, Borissov told reporters on January 20 2010 after the Cabinet's weekly meeting, without specifying what position Mihov would take.Mihov would "strengthen the economy and finance area," Borissov said, giving rise to speculation that Mihov could become a Deputy Prime Minister.That would make Mihov the third Deputy Prime Minister, with Interior Minister Tsvetan Tsvetanov and Finance Minister Simeon Dyankov holding similar positions.Mihov is a professor of economics at one of the world's leading and largest graduate business schools, INSEAD, where he teaches macroeconomics and econometrics.He has a PhD from Princeton University. His areas of teaching include business cycles, monetary and fiscal policy, long-term economic growth, and exchange rate determination.For his teaching in the MBA program he won the Best Teacher Award in 2006.His research is primarily in the fields of monetary and fiscal policies, economic growth and political economy.Mihov is also a research professor at the German Institute for Economic Research (DIW Berlin) and a research fellow at the Center for Economic Policy Research in London. Since 2002, he has served on the Scientific Committee of the Banque de France's Research Foundation.He is also an associate editor at the Journal of the European Economic Association and Macroeconomic Dynamics. In 2006, Mihov was awarded the Distinguished Young Alumnus award by the Moore School of Business at the University of South Carolina.
Heritage Foundation and The Wall Street Journal: Bulgaria deteriorates in terms of economic freedom
The score of Bulgaria in terms of economic freedom worsened by 2.3 points to 62.3 out of a maximum 100 points relative to last year, reveals the latest ranking published by the Heritage Foundation and The Wall Street Journal. It ranked 75 th out of 179 countries all over the world and remains in the group of moderately free countries. Last year, the country occupied the 56 th position. It is the worst rated country of all EU member states and occupies 36 th place in the European region. The deterioration reflects losses in investment freedom and freedom from corruption and growth in government spending. The scores of the monetary and the labour freedom also worsened. The country’s scores exceed the world average in terms of business, trade, fiscal, investment, financial, and labour freedom. Bulgaria continues to lag significantly in terms of property rights freedom and its score remained at 30 as compared to world average of 43.8 as the judicial system fails to solve commercial disputes, register businesses, or enforce judgments effectively. Thus increasing the independency of the judicial system is seen as the key area for reform as the main weaknesses with respect to economic freedom refer to weak property rights, lingering corruption, and burdensome bureaucracy. However, the authors note the comprehensive economic reform and trade liberalization and the competitive flat tax rates as factors for the high economic growth in the past years, the investment expansion and the job creation.
Moody's: Bulgaria becomes the most successful country in fighting economic crisis
Moody's Investors Service, which performs financial research and analysis on commercial and government entities, gave a higher rating to Bulgaria - the country's investment grade (Baa3) was increased from stable to positive on Moody's rating scale. This step restores Bulgaria's positive rating from the time before the crisis, i.e. from September 2008. This is the first positive assessment of the rating of a EU member state after July 2008, the statement of the international agency reads."I express my gratitude to Bulgaria's Minister of Finance Simeon Djankov, who invested considerable efforts in the restoration of Bulgaria's image before the financial institutions," said Bulgaria's PM Boyko Borissov.In his opinion, the fact that Moody's have increased Bulgaria's rating from stable to positive is a proof of the effectiveness of Bulgaria's Finance Minister's work."Let all the critics of Mr. Djankov thank him, as well" the PM recommended. only in a few months, first the Standard and Poor's and then Moody's ranked Bulgaria higher on their rating scales," Mr. Borissov stressed.Several weeks ago Standard and Poor's agency increased its esteem of Bulgaria from negative to stable. "Moody's high esteem of Bulgaria is the successive acknowledgement of the international investors and analysts that the country has the most stable fiscal policy of all the EU member states. Several difficult months are ahead of us, but we have already demonstrated that we are capable of coping with the financial crisis," Minister Simeon Djankov said.
Bulgaria's unemployment rate among lowest in EU
The average annual unemployment rate in 2009 stood at 7.59 per cent, the National Employment Agency said Wednesday.According to the latest data released by Eurostat, the average monthly unemployment rate for the 11 months of 2009 in EU27 was 8.87 per cent, slightly higher in the euro are (9.37 per cent). Bulgaria is among the 9 EU Member States with lowest unemployment rate.Unemployment in Bulgaria in December 2009 was 9.13 per cent, 0.47 percentage points up from November 2009 and 2.86 points up from December 2008.A total of 338,144 unemployed people were registered at job centres in December 2009, which implies an increase by 17,386 from November 2009. Regional unemployment levels were lower than the national average in seven regions: Sofia City (2.90 per cent), Gabrovo (6.66 per cent), Bourgas (6.74 per cent), Varna (7.40 per cent), Stara Zagora (7.43 per cent), Plovdiv (8.22 per cent) and Pernik (8.46 per cent). In the remaining 21 regions, the unemployment rate was above the national average, with the highest regional levels registered in Smolyan (15.86 per cent), Turgovishte (15.10 per cent), Montana (14.51 per cent) and Shoumen (14.23 per cent).The share of newly registered unemployed people remains higher in services (48 per cent) and in industry (30.3 per cent).A total of 9,380 unemployed people started work in December 2009. Some 7,682 unemployed people (81.9 per cent) who started work over the month found jobs through the mediation of job centres, most of them (7,292) being engaged in the real economy.At end-December, the number of vacant jobs offered at job centres stood at 3,120, a decrease by 35.6 per cent from a month earlier. There are 2,584 vacancies on the primary labour market, 2.3 times less than in December 2008.
Lyulin Highway to be completed by end-2010, contractor says
Lyulin Highway, the shortest of Bulgaria's planned highways at 19km, would be completed by December 21 2010, a company official said on January 21.The consortium of two Turkish construction companies, Mapa and Cengiz, gave the Government on January 20 its schedule for completing the highway."The schedule we presented is realistic and doable. We will not compromise with quality, we will increase capacity so that we complete Lyulin on time," the head of the Bulgarian subsidiary of Mapa, Rüştü Dinçer, told Dnevnik daily."Right now we are in talks with several Bulgarian companies to subcontract and if we have to, we can sign contracts with 10 companies."The consortium has built seven km of highway, but only eight per cent of the bridges and has only started on the first of three tunnels.Mapa-Cengiz has made headlines over allegations that it paid Turkish workers triple the salaries of its Bulgarian employees and was also criticised for the slow pace of work on the project, which is financed with European Union funds.Regional Development Minister Rossen Plevneliev has rejected the plea made earlier in January by the chamber of Bulgarian road-building companies to break the contract with the consortium and award it to Bulgarian companies. Doing so would result in losing the European Union funding for the project, Plevneliev said.
Drug maker Sopharma boosts foreign sales in 2009
Bulgarian pharmaceutical company Sopharma reported a 280 per cent increase in sales in southeastern Europe and Turkey in 2009, website investor.bg reported on January 21 2010. The company did not specify the account, the report said.Sopharma reported a 118 per cent increase in consolidated revenue to 11.7 million leva for the third quarter of 2009. For the first nine months of 2009, Sopharma's profit was 31.2 million leva, a 90 per cent increase over the same period of 2008.Sopharma said on January 5 2010 that overall exports grew by 16 per cent in 2009. Exports to European Union countries increased by 35.8 per cent and shipments to Asia rose by 36.1 per cent. Exports to Russia and the US grew by 11.3 per cent and a 6.7 per cent, respectively.In the last quarter, the drug company's shares lost 3.11 per cent to 4.108 leva, which put the company's market capitalisation at 542.3 million leva.
INVESTMENTS:
Bulgarian business demands foreign investors
"Give the big infrastructure projects to foreign companies to save Bulgaria from the crisis," Bulgarian entrepreneurs demanded before Bulgaria's authorities.
The idea is that foreign investors start working on big national and infrastructure projects such as gasification and construction of highways and thus pouring fresh money in Bulgarian economy. Bozhidar Danev - president of Bulgarian Industrial Chamber (BIA) presented the project to Bulgaria's minister of economy Traycho Traykov. Bozhidar Danev asked minister Traykov to introduce the idea to PM Boyko Borissov.
"Moreover, Bulgaria does not have a single project ready for application under EU structural funds for the period 2013-2017," stated Bozhidar Danev.
"Foreign investors are interested in all projects from the anti-crisis plan of Bulgarian business," assured BIA president.
Bulgaria's Enemona to design PV systems worth EUR 18.6 M for local buyer
Bulgarian engineering, construction and energy group Enemona said it was assigned a deal to design photovoltaic systems worth 36.3 million levs ($26.7 million/18.6 million euro) for local engineering company Energomontazh. The price does not include value added tax. Enemona will design 38 megawatts of photovoltaic (PV) systems and will perform the steps necessary for the approval of the working projects for the construction of the solar capacities, it said in a statement posted on the website of local financial and business news provider Investor.bg on Friday. The contract would expire on July 31. Energomontazh owned 0.24% of Enemona as of June 30, 2009. Shares of Enemona, part of the blue-chip SOFIX index on the bourse in Sofia,were traded 0.5% higher at 9.6 levs by 1101 GMT on Monday.
EBRD announces loan to support Bulgaria wind farm project
The European Bank for Reconstruction and Development (EBRD) has announced a loan of EUR 60 B to support the development of renewable energy in Bulgaria.The syndicated loan has been made to Eolica Bulgaria to finance the construction of a wind farm at the eastern Bulgarian town of Suvorovo, some 25 kms inland from the Black Sea coast.The wind farm will consist of 30 wind turbines, with an estimated capacity of 60 MW. The project is expected to go into operation at the end of 2010."Similar to many countries in the region, Bulgaria relies significantly on thermal and nuclear sources to satisfy its power needs, with less than 10 per cent of its electricity generated from renewable sources, of which just one per cent from wind power. The project will help Bulgaria meet its EU set target to increase its renewable energy production to 16 per cent by 2020," an EBRD spokesperson has announced.Eolica Bulgaria is majority-owned by the Spanish Enhol Group, and focuses on development of renewable energy in Spain, central and eastern Europe. The company will develop and operate the wind farm, build a new substation at the project site and a line to connect the wind farm to the national power network.At a total cost of EUR 108 M, the project is co-financed by a EUR 11 M loan from the Black Sea Trade and Development Bank and by Enhol Group’s equity investment.This is the EBRD’s second wind farm project in Bulgaria. In 2008 the Bank and the International Financial Corporation provided a EUR 198 M investment for the construction of the St Nikola wind farm.Since the beginning of EBRD operations in Bulgaria, the Bank has committed EUR 2 B in more than 120 projects in key sectors of country’s economy, and has stimulated additional investment of more than EUR 6.7 B.
Bulgaria FDIs collapsed to EUR 2.6 B 2009
Foreign direct investments in Bulgaria last year marked a sharp decline and did not exceed 2,6 B from January till November, down by EUR 3,4 B over the same period the previous year, data of the InvestBulgaria Agency shows.Stoyan Stalev, Director of the InvestBulgaria Agency, expects foreign direct investments to reach EUR 3 B by the end of the year 2009.He expects the figures to be revised upwards after the Bulgarian Central Bank publishes its data in April.Bulgaria's current account deficit stood at EUR 176,8 M in November, narrowing from EUR 861 M over the previous year, according to data of the central bank.For the January to November period, the current account deficit stood at EUR 2,56 B, narrowing from EUR 7,69 B a year ago.From January to November imports fell faster than exports, dropping by 34,6 % to EUR 14,5 B on an annual basis. Exports went down by 24.3 % to EUR 10,8 B year-on-year, the data showed.Bulgaria sank deeper into recession in the third quarter of last year, its economy contracting 5,8% y/y, following a 4,9 % y/y drop in the second quarter of 2009.
Bulgarian mineral fertiliser maker Novo Chimco to invest EUR 35 M to relaunch production
Bulgarian mineral fertiliser maker Novo Chimco plans to invest 35 million euro ($50.3 million) to relaunch production, local daily Dnevnik quoted the company's new owner as saying in an interview on Monday. The plant, which produces carbamide, ammonia, carbon dioxide, argon and various types of catalysts, halted operations in 2003 and was declared insolvent in 2004. In late November local construction enterpreuner Nikolay Galchev bought the plant from Panama-registered company Atlala for 500 levs ($367/ 256 euro) pledging to repay its debts totalling 85 million levs in eighteen years. "We are currently holding talks and searching for a new strategic partner in natural gas supplies [...] By the end of May we should have a contract and possbly a new investor should have entered the company. Right after that we start implementing the programme for the plant's development which envisages investment of over 35 million euro," Galchev said. "By the middle of next year we plan to operate at 50% capacity, which means having an annual procution of 400,000 tonnes of carbamide and over 800 employees. The idea is that in yet another year, or by the end of 2012, we reach full production capacity. The employees will then exceed 1,500," Galchev said. The plant's development programme also envisages building a new water treatment plant and replacing some of the carbamide production facilities with new ones to meet the environment protection requirements.
COMPANIES:
Bulgarian steelmaker acquires majority share in Danube port
Steelmaker Stomana Industry in Bulgaria has purchased a 73% stake in the country’s Port Vidin North, in Svishtov on the Danube River, for EUR 2.7m ($3.9m), Stomana’s Greek parent company Sidenor tells Steel Business Briefing.As well as the dock facilities and equipment, Stomana has acquired 46,500 square metres of adjacent land with a view to expanding the existing docks. “The investment is in line with Sidenor’s policy for further development of international markets as well as the expansion of its activities,” the company comments.“We needed to buy our own port in order to have some independence when it comes to processing our freight,” Anton Petrov, regional manager for Sidenor’s shareholder Viohalco, is quoted as saying in the local media. “The port is small but it has the required infrastructure and we are poised to invest an additional EUR7-10m to make it suitable for our needs,” he added.The port will mainly be used by Stomana for the import and export of steel. However, other companies will continue to use the terminal. The other 27% stake in the port was bought by German logistics firm Preymesser.Stomana Industry is the leading producer of rebar in Bulgaria and also exports to other markets in the region, notably to Romania and Cyprus. The steelmaker’s plate and special quality bar is exported to the rest of Europe.
Bulgarian firms seek loans to snap up impaired assets
With recession gripping the Bulgarian economy tight, a new niche is opening on the financial market as companies are seeking bank loans to finance purchases of impaired assets.Bulgarian non-banking lender Creditex forecast that corporate lending will record an increase this year as companies seek cash to pay for bargain production capacities, warehouses and even companies as a long-term business expansion opportunity.Krasimir Goumnishki, credit director at Creditex, said the firm has already received inquiries on such financing. one banker from a big local lender, speaking on condition of anonymity, said that the bank's corporate customers have also inquired about loans to purchase cheaper assets.Depressed markets are the best time to strike such deals as viable assets come out on the market at lucrative prices and companies with long-term development on their mind need assets, Goumnishki said.He estimated that assets were now selling at half price, with office space available for about 1000 euro to 2000 euro before the economy imploded and half that amount at present.The new trend raised a eyebrows with employers and the Confederation of Employers and Industrialists in Bulgaria (CEIBG), one of the bigger employer associations in the country, said that purchases of impaired assets on a bank loan were unlikely to take place on the local market.CEIBG executive director Evgenii Ivanov and Vassil Velev, chairman of the Bulgarian Industrial Capital Association (BICA), both said banks were currently extremely cautious, providing no long-term financing and taking no risks, while the cost of loans has rocketed. Any companies doing such deals at the moment were tapping into the own reserves or sought financing from abroad, Velev said.
Nord Holding to recycle used cars, household appliances
Bulgarian metal and glass scrap retailer Nord Holding will buy out old cars and household appliances, the company said. The group has set up two new subsidiaries -- Nord Auto Recycling and Nord Elrecycling -- through US-based Capital House Investments, according to the Bulgarian Trade Registrar. The two companies will collect all equipment with plugs, batteries or sockets. Alongside metal parts and car batteries, Nord Holding will fully recycle car glass to be used it brick manufacture. With the new units, the holding company will close its production cycle of buying, dismantling and recycling. Nord Holding has a 182-strong network of own or leased waste collection points nationwide. For 2008, the group posted a turnover of BGN 152.1 million. It claims it captured 24% of Bulgaria’s iron scrap trade and 14% of the non-ferrous market. Nord Holding is majority-owned by Borislav Malinov, chairman of the Bulgarian Recycling Association. The Bulgarian metal scrap market nourishes some 900 players with 2,800 grounds. It gives job to 20,000 people.
Bulgarian watchdog allows Orbitel acquisition by Spectrum Net
Bulgaria's Commission on Protection of Competition (CPC) said on January 19 2010 that it would allow Bulgarian local Spectrum Net to acquire domestic peer Orbitel in a deal worth five million euro.Both companies compete on the same market – fixed-line phone service, internet service access, data transfer and voice-over-internet-protocol (VoIP) services, CPC said in a statement.The merger would lead to better quality of service and lower costs from the synergies existing between the two companies, according to the brief the two companies filed with the regulator.Vivacom, the former state fixed-line monopoly, has 96.1 per cent market share, by subscriber base, on the fixed-line segment. The merger of Orbitel and Spectrum Net would strengthen competition on the market, with the final result of better-quality service at lower prices for the customers, CPC said.The deal would not have a negative impact on the telecoms market, the regulator said.The two telecoms, both set up in 1997 to challenge Bulgarian Telecommunications Company, now called Vivacom, plan to merge operations and expect to report 20 million euro in revenue and a gross profit of five million euro in 2010.Orbitel's previous owner Magyar Telekom, itself a unit of Deutsche Telekom, will take a hit on the sale of Orbitel, having bought the company for for eight million euro. Deutsche Telekom indirectly controls Bulgaria's second-largest mobile operator Globul, part of Cosmote, the mobile unit of Greek Telecoms group OTE, in which Deutsche Telekom owns 25 per cent.
Bulgaria’s road agency locks up EUR 150 М for companies
For a seventh month in a row, Bulgaria’s Road Infrastructure state agency is struggling to pick a company to repair 800 kilometres of roads under the Transit Roads ІV programme. The tenders were held back in July 2009 but the winners have not been declared yet in 11 competitions. The delay is blamed on the fact that no official decision has been made on the construction of the sections, said the agency’s head Bozhidar Yotov. He hopes most contractors will be appointed by the end of this month. Bidders in public procurement orders complained that the government is extending the terms of bank guarantees, blocking up fresh cash for companies. Officials from candidates speaking on condition of anonymity slammed the Transport Ministry for keeping EUR 150 million in bank guarantees locked up given the wretched state of the economy. Transit Roads ІV has been provided with a cash pot of EUR 705 million, including a EUR 380 million loan from the European Bank for Reconstruction and Development (EBRD), with the balance coming from the state budget. The financing has been earmarked to renovate 1,510 km of roads. Contractors have been selected for only eight of the 27 tenders.
Bulgaria’s Slantcho, Varna Plod scoop up sweeter sales
Bulgarian baby food producer Slantcho and fruit and vegetable trader Varna-Plod were among the first to file in their 2009 earnings report, with the former pulling off solid gains in sales and revenue and the latter seeing both almost flat. Slantcho posted a profit of almost BGN 1.5 million at the end of the fourth quarter of the year, a 64% increase from the corresponding period of 2008. Sales surged by 12% to BGN 4.2 million as expenses shed less than 1%. The company’s baby food production unit generated more than half of the sold produce, while its extruded foods capacity was also a major contributor. Diet food fetched a smaller amount but demand is perking up, the firm said in its report. Slantcho rounded off the year with no long-term liabilities as assets rose by almost BGN 500,000 to BGN 3.85 million. Varna Plod ran up long-term liabilities of only BGN 71,000 for 2009. Sales amounted to BGN 2.6 million, up almost 7% year-on-year, but the profit picked up less than 2%, adding up to BGN 1.7 million. The company said in its report it has shaved intercompany costs but no scaling-down of business operations is on the drawing board.
Carlsberg Bulgaria to scale up Bulgarian business
Carlsberg Bulgaria, the local unit of the Danish brewery group, will acquire Blagoevgrad-based municipally-owned bread and bakery products maker Hlyab I Hlebni Izdeliya in the southwestern town, the municipal authorities said. The news was confirmed for Dnevnik by Carlsberg Bulgaria EO Alexander Grancharov. He said a portion of the new facility will accommodate new production lines and warehouses although plans have not been fully drafted yet. In a letter to mayor Kostadin Paskalev, the brewer outlined plans to close four of its capacities on the Balkans and channel investments into their Blagoevgrad facility. Grancharov declined to elaborate on the matter. Carlsberg was the only bidder for the municipal company, which went to the chopping block for the third time. The company has paid BGN 2,309,001 for the deal against an indicative price of BGN 2,309,000. Hlyab & Hlebni Izdeliya has three factories in Blagoevgrad and another one in Logodash, near the Macedonian border. It gives job to 55, according to figures by the municipality.
Advent International may invest EUR 150 M in CEE countries this year
US equity house Advent International may invest EUR 150mn in equity in the CEE countries this year, up from EUR 100mn last year. Advent is interested in the education, the healthcare and the consumer goods sectors. Advent is searching for viable companies with difficulties to cover their liabilities and to obtain bank loans. Last year’s investments financed four acquisitions. Advent acquired 79% stake in the country’s leading water bottling company Devin from Austria ’s investment group Soravia and local physical persons in September at the price of EUR 22.1mn. In April 2008, Advent International set up its fourth fund, ACEE IV, which was to invest EUR 1bn in the Eastern European countries, including Bulgaria . The fund announced plans to acquire stakes worth EUR 30mn to EUR 100mn of specific companies but additional resources from the international funds of the company might be used to finance larger projects.
THE CRISIS:
Crisis pummels Bulgaria’s ferrous metals
Sales of ferrous metals and ferrous metal products in Bulgaria tumbled by 41.9% year-on-year in 2009 under the weight of the economic turmoil that pounded markets, showed figures by the Bulgarian Association of the Metallurgical Industry (BAMI). The output of steel, rolled products and derivatives has halved from a year ago. Iron and oxygen converter steel casting grounded to a stop a year ago as Bulgaria’s debt-saddled steel behemoth idled its respective capacities. Ferrous metal exports have dwindled by 46.1% to 558.8 million tonnes, with European shipments shrinking to 230.6 million tonnes, which is half the year-earlier volume.