One Bidder for Bulgaria's BDZ Freight Railway Services

Business | July 17, 2012, Tuesday // 10:56|  views

Only one bidder has shown interest in the upcoming sale of the cargo unit of the Bulgarian State Railways (BDZ) company. Photo by BGNES

There is only one bidder in the privatization procedure of the freight services of Bulgaria's troubled, State-owned, railroad company BDZ Hodling.

The information emerged after the expiration of the deadline to submit proof for classified information clearance, which is one of the mandatory conditions for bidders.

The one bidder is Duet Railway Bulgaria, which is part of a holding, registered on July 3 in Cyprus. Its manager Daniel Damyanov informs that the British investment fund Duet Group is behind the Holding.

From this point on, the privatization procedure precludes the joining of other bidders.

"During this difficult in financial terms year we must respect every potential investor. Because there is only one candidate, the privatization procedure will most likely conclude earlier," says the CEO of the State Privatization and Post-Privatization Control Agency, PPCA, Emil Karanikolov.

The other 5 companies, which initially purchased documentation to take part in the public procurement, have not yet commented on their decision. Only the Czech "Advanced World Transport" officially reported they are withdrawing from the tender.

"Even if we alleviate the conditions for participation, we would not attract other companies," Karanikolov explains.

Transport Minister, Ivaylo Moskovski, noted recently that the "logical sale price" is at least BGN 200 M, adding the State hoped to use the money to pay off some of the staggering debts of BDZ.

According to the Chairman of the BDZ Board of Directors, Vladimir Vladimirov, the fact that there is only one bidder is not a problem.

"What matters is that we have a candidate and we can carry out plans for financial revenues," Vladimirov told the Bulgarian National Television, BNT. He explained the lack of interest with the economic crisis and the fact that Serbia, Romania and Poland are also planning to sell their freight railways.

In the first five months, the BDZ losses have decreased by BGN 7 M, according to him.

On June 12, the PPCA announced a public tender for selling 100% of the capital of BDZ Freight Services.

The privatization of the cargo unit of BDZ has been a highly controversial matter for the past few years.

The aims of the privatization motion as recorded in the official paperwork are to preserve the business activity of BDZ Freight Services, to help modernize the railway sector in Bulgaria, and to generate fresh funding for the Bulgarian railways.

The buyer is expected to make a commitment to the employees of the company "to guarantee social peace", according to the PPCA.

Both strategic and financial investors were eligible to apply for the purchase of 100% of the capital of BDZ Freight Services.

In addition to being eligible for access to classified information, strategic bidders were expected to have at least 10 years of experience with railway freight services, to possess the respective certification, to boast revenues of at least EUR 400 M per year, and to have undergone financial audits.

Financial bidders were also required to own shares worth at least EUR 1 B, to have own capital of at least EUR 20 M in the past year, and to have undergone financial audits for the past three years.

The required deposit to participate in the tender is EUR 20 M.

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Tags: Bulgarian State Railways, BDZ, BDZ Freight Services, privatizaiton, Privatization and post-Privatization Control Agency, tender documents, tender, investor, Vladimir Vladimirov, Emil Karanikolov, Ivaylo Moskovski, classified information, Duet Railway Bulgaria


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