Bids' Deadline for Bulgaria's Troubled Railways Expires

Bulgaria hopes to have a successful second attempt to sell the cargo unit of the State Railway company, BDZ. Photo by BGNES

The deadline for companies to submit their bids for privatization of the troubled Bulgarian State Railways company, BDZ Holding, expires Friday, March 29.

It was extended on the request of candidates on grounds they needed more time to gather the required documents.

Several days ago, caretaker Transport Minister, Kristian Krastev, launched emergency meetings to salvage BDZ from liquidation. He says the company is on the brink on collapsing, explaining the creditors are owed about EUR 35 M, while its total debt is over BGN 700 M.

At the beginning of February, the Sofia City Court ordered a freeze of 100% of the assets of the cargo unit of Bulgarian State Railways company, BDZ Holding.

The freeze happened on the request of the Dublin-based German-Irish bank Depfa Bank, which owns bonds from the first bond loan for BDZ. BDZ owes to Depfa about BGN 6.3 M.

The news came on the heels of reports that five banks have filed a claim with the London Arbitration Court to declare BDZ Holding, bankrupt.

Experts comment that both – the freeze and the claim – would hurdle the privatization of the cargo unit. The freeze actually and effectively stops the procedure. Those who deal with frozen assets face prosecution under the law.

In mid-November 2012, Bulgaria's Privatization Agency launched a second privatization procedure for BDZ's Freight Services, after the first one fell through.

The second attempt to sell the cargo unit of BDZ only included strategic and financial investors.

The privatization of BDZ's profit making unit, Freight Services, is to secure money to cover huge debts of the company and help revive its other unit, Passenger Services.

However, experts from the railway sector have already said the State should not count on receiving much as the revenues of the cargo unit dropped by 30% in 2012, while the debt keeps climbing up.

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