Bulgartac-Holding Sets a 28 Million Leva 2007 Investment Program

Bulgartabac Holding AD’s 2007 investment program is based on the investment projects in the business programs of its subsidiaries, which are largely influenced by Bulgaria’s EU accession and the system changes resulting from it, the company’s annual report filed in BSE shows.

The company plans to invest a total of 28.335 mln leva in 2007, including 17.897 mln leva in new investments and 10.438 mln leva in reconstruction and modernization.

Most of the money, allocated for new investments, will be used to increase the share of the “slim” cigarettes and other non-standard products of Bulgartabac. The amount of these funds is almost twice bigger than the funds allocated for reconstruction and modernization.

The investment program is aimed at introducing and development of new technologies in the processing of tobacco and production of tobacco products, which are expected to improve the volume and quality of the output, to lower energy costs and to improve the control over the physical and chemical parameters of Bulgartabac’s end-produce in accordance with EU standards. Consumption of basic and secondary materials is also expected to drop.

In order to keep its local and international market share, Bulgartabac plans to concentrate its efforts on developing new products and formats of cigarettes and packs, as well as on the improvement of its established products.

All requirements on the restriction of the harmful effects of cigarettes meeting EU standards came into force in the beginning of 2007. A total of 21.400 mln leva of the planned investments will come from investment credits, and the rest of the money (6.935 mln) will be provided by the company.

The investment programs of Bulgartabac’s subsidiaries are also bound with Bulgartabac Holding’s privatization strategy. They envisage renovation, reconstruction and modernization of their production capacities.

In 2006 Bulgartabac-Holding AD donated 4 mln leva to the Fund for Compensation of the Social Effects from Restructuring and Privatization. 2 mln leva of the money were paid in the third quarter, and another 2 mln leva were paid in the fourth quarter.

The subsidiaries’ privatization procedures, launched with an open procedure in 2006, are expected to be completed or to reach their final stage by the end of June 2007. Gotse Delchev-BT AD will be privatized through public offering on BSE – Sofia, Kardjali-BT AD – through public auction (the only criterion in this competition will the price, offered by the candidates).

In the beginning of 2007 a decision was made to sell the four cigarette plants through sell-off procedures, which are expected to be completed in the end of 2007.

The sale of shares is expected to bring 2.308 mln leva in the first quarter of 2007, 6.95 mln leva in the second quarter, and 37.528 mln leva in the third quarter of the year.

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