Bulgaria Selects Buyer for Military Factory Stake

The Bulgarian state has picked a buyer for its 35.78 per cent share at "Arsenal Kazanlak", one of the largest military factories in the Balkans, the Privatization and Post-privatization Control Agency announced.

The sale of the minority stake in Arsenal Kazanlak adds another BGN 15 M to the account of the Privatization Agency, which is supposed to raise BGN 450 M from the sale of state assets in 2011 – as the government requires it to in order to fill gaps in the state budget.

This is the third larger privatization deal in Bulgaria in 2011 after the sale of "Industrial Construction Holding", a state company, to a local private investor for BGN 12.01 M, and the sale of state cigarette-making giant Bulgartabac to Russian bank VTB for EUR 100.1 M.

The buyer of the minority stake is the actual majority shareholder, "Arsenal 2000", a private firm, which will own 99.63% of the Arsenal military plant located in the town of Kazanlak in Central Bulgaria, once the deal is complete.

Arsenal 2000 is to pay the purchase price of a total of BGN 15.1 M through a direct cash transfer into the account of the Bulgarian Privatization Agency. The privatization contract is supposed to be drafted within 30 days.

A total of three bidders bought tender papers for the privatization of the minority stake at Arsenal Kazanlak; however, one failed to provide the necessary request for access to classified information, and another pulled off on its own.

Arsenal 2000 bought 51% of the capital of Arsenal Kazanlak in 1999 for BGN 3.9 M. Two years later, it purchased another 12.85% of the large military factory for BGN 983 000. According to the register of the Privatization Agency, the buyer has so far met all of its privatization commitments.

In March 2011, Bulgaria's Borisov Cabinet decided the Bulgarian state will no longer be required to keep a 34% share in formerly fully state-owned defense industry plants, thus paving the way for the complete privatization of what remains in terms of state assets in partially privatized military plants.

After the sale of the minority stake in Arsenal Kazanlak, the Bulgarian government remains the sole owner of the capital of three military production complexes: VMZ Sopot, NITI Kazanlak, and TEREM (a military repair complex of eight plans which are in different privatization stages).