Up to five bidders are expected to submit firm offers for Bulgarian national carrier Balkan Airlines, as the next privatisation hits the region.
The Bulgarian government says it wants to find a strategic rather than financial investor for up to 75 per cent of Balkan, but adds it would also consider selling a smaller than majority stake if an appropriate bid was made.
Treuhand Osteuropa Beratungsgesellschaft (TOB), the Berlin based consultants charged with handling the sale along with British Airways subsidiary Speedwing, have agreed a shortlist of five interested parties with the Bulgarian government. All of these have connections with the airline business, but 'are not necessarily airlines', according to TOB. It is understood the government selected these rather than any of the five rejected financial-based bidders because it wants the new partner to participate in a strategic rethink and restructuring plan for the airline.
The successful bid will include a business and strategy plan but also some refinancing, while the new partner must also keep Balkan as the national carrier for at least five years. The airline needs someone who can renegotiate the terms of its mounting debts. 'We are looking for finance to renew our fleet and some fresh money for other projects such as improving quality of services, training and maintenance,' says a spokesman for the airline.
Both the TOB and the Bulgarian government refuse to name who the five bidders are. The deadline for the bids is 13 June and the winning bid is likely to be known at the end of August.
The government says it will choose the successful investor 'as quickly as possible.' 'The government has a strong commitment to selling Balkan Airlines quickly,' says TOB managing partner Eberhard von dem Bussche. 'The last time it tried to privatise Balkan [five years ago] it still had its head in the clouds.' With a new government in place the state is now committed to selling 100 per cent of the airline, although up to 20 per cent is likely to be sold to employees and 5 per cent to restitution funds.
The privatisation agency in Bulgaria says it is happy selling the remaining 75 per cent to a foreign strategic investor. A public flotation is unlikely at this stage but the agency says one is possible sometime in the future if a lower than 75 per cent stake is sold to the strategic investor.
Balkan Airlines' flight operations (excluding unprofitable non-airline activities) completed 1997 with a turnover of around US$180 million and it is said to be in profit, says Bussche. The turnaround contrasts with the previous five years' heavy losses and relates to a substantial decrease in cost structure and the improvement in Bulgaria's economy, says Bussche.
Source: Airline Business
