The process of the privatisation of Balkan Airlines continues, but not all the horses remain in the race

Published: 6/24/1999

The Bulgarian Privatisation Agency (PA) is continuing to negotiate with four candidates for the privatisation of Balkan Airlines. These comprise the Israeli consortium, made up of Zeevi H & Knafaim and Arkia, the Russian air consortium, RAK, the Delaware -registered Air Bulgaria which is reputed to involve Russia's Vnukovo Airlines, and the German business investor, Ulrich Benteler. Surprisingly, the only criteria for compiling the list of approved candidates was the submission of $400,000, in the form of deposit or a bank guarantee, by each candidate. The deposit of a certain sum has historically been a necessary requisite for the acceptance of offers by privatisation bodies. It is an unusual requirement for the reclassification of already-acknowledged offers. Mr Zahary Zelyazkov, Executive Director of the PA, confirmed that the agency would negotiate simultaneously with the four candidates at the same time, and approve the one which offers the most beneficial deal. According to Mr Zelyazkhov, the successful bidder should be chosen by June 11th 1999. Two previous candidates - Air Rent S.A.R.L and Data Control, both registered in Luxembourg - have dropped out of the competition. On May 31st 1999, three weeks after the deadline for the submission of offers, Mr Zelyazkov announced that he would name the shortlisted candidates. It was intended that candidates should confirm plans to deposit the due sum on this date. In fact, negotiations with the genuine candidates were delayed for weeks, owing to inaccurate submissions. According to unofficial information, PA considers the Israeli consortium and Air Bulgaria as being the most viable potential buyers. Air Bulgaria was initially not acknowledged as an acceptable candidate by Mr Zelyazkov, as the company did not submit a new offer within the specified time. The PA supervisory board subsequently accepted the offer as valid and, last week, acknowledged Air Bulgaria as a candidate. Although the company had not complied with the formal offer procedures, it confirmed its intention to apply, by depositing a bank guarantee at the International Bank for Trade and Development.

Article ID: 624