Bulgarian Military Plant to Take Bank Loan to Pay Overdue Salaries

Some 4000 workers of Bulgaria's VMZ Sopot military plant, who have had their salaries delayed by a month, are expected to get payment after the arms manufacturer withdraws a loan from Corporate Commercial Bank. Photo by BGNES

Some 4000 workers of Bulgaria's VMZ Sopot military plant, who have had their salaries delayed by a month, are expected to get payment after the arms manufacturer withdraws a loan from Corporate Commercial Bank.

The announcement about the loan was made by Asen Vasilev, caretaker Minister of Economy, Energy and Tourism, during a press conference on Friday.

"As far as I know, intense activity in connection with securing a loan from KTB is currently underway. I cannot say if a draft agreement for the loan has already been achieved," Vasliev stated, as cited by investor.bg.

He did not specify the amount of the loan nor how the bank had been selected.

Bulgaria's caretaker Economy and Energy Minister admitted that the situation at VMZ Sopot was particularly worrying, adding that meetings had been held with representatives of the trade unions at the plant.

Dimitar Atanasov, representative of the Podkrepa Labor Confederation at the Sopot-based arms manufacturer told Sega daily that there were no tensions at the plant because the payment had only been delayed by a month.

He suggested that the workers would most probably get their salaries by next Thursday but could not specify the amount of the overdue sum.

At the beginning of 2013, VMZ workers started protests after their salaries had been delayed for months on end.

In end-January, following the intervention of then-Prime Minister Boyko Borisov, VMZ Sopot was transferred BGN 4 M to pay overdue salaries.

Borisov did not go into detail about the source of the rescue money transfer, saying that an international contractor of the state-owned arms manufacturer had made an advance payment.

VMZ Sopot has run up debts of over BGN 140 M to its suppliers and Bulgaria's National Electric Company (NEK).

Bankruptcy proceedings against VMZ Sopot were commenced by Mechanical Plant-Devin AD over a debt of BGN 2.5 M accumulated in the period 2010 – 2012 for ammunition parts.

On February 7, Bulgaria's Parliament took VMZ Sopot off the list of companies banned from privatization, thereby facilitating the sale of the military plant by the Privatization and Post-Privatization Control Agency (PPCA).

On January 14, the privatization of the heavily indebted arms manufacturer was terminated after the sole bidder, Sofia-based EMKO EOOD, failed to submit a mandatory deposit for participating in the procedure.

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