Financial news

Bulgaria's consolidated budget deficit exceeded BGN 1.5 B in the first six months of 2010 due to a fall in revenues and a rise in spending for social payments, the finance minister announced. Revenues that flowed into the budget were two times lower than expected and totaled BGN 11.2 B. Expenses also account for 50% of the forecast and stand at BGN 12.7 B. Despite pledges to stick to a strict fiscal policy, the government has adopted a draft bill for 2010 that targets a deficit of 4.8% of GDP on a cash basis and 3.9% of GDP under EU accounting rules, far wider than initial estimates. Among other things, the budget revision allowed the government to reach into Bulgaria's fiscal reserve, setting a minimum of BGN 4.5 B at the end of the year.

Over BGN 2m EU projects to get first-class investor status EU-financed projects worth more than BGN 2 million should be considered first-class investments, a move that would double the speed of administrative servicing, according to Tomislav Donchev, Bulgaria’s minister in charge of EU funds absorption. Alongside fast-track administrative support, Bulgaria’s first-class investors also get the right to purchase state property with no tender of competition as well as receive government assistance in infrastructure development adjoining their projects. The proposed changes to the Investment Promotion Act will apply to investment projects funded under operational programmes Regional Development, Transport and Environment. Eligible candidates involve local governments, the government's Road Infrastructure Agency (RIA), state-run National Railway Infrastructure Company as well as the institutions related to marine and river transport.

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Companies

Heating companies woke up with new debts worth several million. NEK began to send letters and withhold money for heating companies for overpaid electricity by force since July. Amounts have been paid last year at the old prices for electricity produced by heating companies. The methodology for calculating the quantities, however, suddenly changed on December 30, 2009. As a result, heat-supply companies should return money. By that date the price of electricity from cogeneration of heating companies is determined individually for each of them depending on available capacity. The new provision prices are harmonized for all. We survive amid a crisis, but now they will finish us, utility heads cried out. NEK and the electricity distribution companies claims eight heating companies for refund. These are heat supply companies in Sofia, Pernik, Pleven, Sliven, Rousse, Vidahim, Deven and Svilosa TPP.

Chaos and red tape in Bulgaria's regulations are believed to be a major obstacle to attracting large-scale foreign investments in renewable energy, according to analyst Zlatin Sarastov. Sarastov, analyst from Amphora Capital, a Sofia-based consultancy, has argued, as cited by the Cross news agency, that the recently announced investment of Japanese company Toshiba in a Bulgarian solar plant should alert the Bulgarian government about the expectations of serious investors for predictability in state regulations in the sector. In his words, the long period of return on investments and the price fluctuations of the equipment are combined with the lack of certainty and clarity with respect to the development of Bulgarian infrastructure and energy market regulations to chase away investors in renewable energy.

ERG Capital 1 and ERG Capital 2, the real estate investment trusts (REITs) of Bulgarian American Credit Bank (BACB), have clinched a deal to sell their entire property portfolios for EUR 27 million combined, the companies said. If the deal is implemented, each fund could earn a profit of BGN 14 million that will be distributed among shareholders in line with statutory rules for REITs operating on the Bulgarian market. The REITs have signed preliminary accords with an unnamed foreign investor and a number of conditions need to be fulfilled to sign the final agreements. One of the conditions includes whether the tenant of two of the Praktiker buildings will exercise its the right of first refusal and commit to buy the properties under conditions no worse than the negotiated. Furthermore, the buyer should successfully carry out due diligence within two months after a potential refusal by Praktiker.

Bulgaria will inquire with the European Commission whether it would be possible to provide free quotas of greenhouse gas emissions from the State reserve for new market entrants to Brikel TPP in order to enable the company to continue operating. “Other large combustion plants with ecological problems may also benefit from these allowances,” explained officials from the Ministry of Economy. If the European Commission does not approve this option, extra allowances worth €50 mln have to be purchased in order to run the company. “The owner of Brikel TPP, Hristo Kovachki is committed to investing the amount of €38 mln in FGD plants so that the company can meet ecological requirements,” said Minister Traikov.

Europe

Anglo Irish Bank Corp. Chief Executive Mike Aynsley put a EUR 25 billion estimate on the Irish government's bill to bail out the bank, as it reported a huge first-half loss and said it will seek to wind down at least 80% of its business over 10 years. Ireland has injected EUR 22.88 billion into the bank since it was nationalized in January 2009, the biggest of a series of bank bailouts as a decade-long boom in Ireland's economy reversed sharply. The country's borrowing costs have soared in recent weeks amid worries that the final bill for recapitalizing the banking sector could reach EUR 90 billion or more. For the first six months of 2010, Anglo Irish Bank posted a net loss of EUR 8.21 billion, reflecting a EUR 3.5 billion loss on assets sold to National Asset Management Agency, a body set up to handle Irish banks' bad loans, and EUR 4.9 billion in impairment charges.

America

Burger chain Burger King Holdings Inc., which became public in 2006, is in discussions with private equity firms for a possible sale of the company, the Wall Street Journal reported, quoting people familiar with the matter. British private equity firm 3i Group PLC is said to be interested in the hamburger chain, but the status of the talks is not yet clear. "It's uncertain whether these discussions will result in a sale," the report added. Burger King has a market capitalization of about $2.26 billion, and operates more than 12,000 restaurants in over 75 countries. However, after going public about four years ago, the fast food chain had a tough time as the recession and unemployment reduced consumer spending. Last week the company said its fourth-quarter net income declined to $49.0 million or $0.36 per share from $58.9 million or $0.43 per share in the same quarter last year.

Asia

Toyota Motor Corp. and Honda Motor Co. led the biggest increase in Japan’s monthly auto sales in 38 years as car buyers rushed to take advantage of government subsidies set to expire this month. Sales of cars, trucks and buses, excluding minicars, rose 47 percent to 290,789 in August from a year earlier, the Japan Automobile Dealers Association said in a statement today. The surge was the biggest since December 1972. Japan’s auto sales started recovering in August 2009 from a yearlong decline as government rebates and tax cuts for fuel- efficient vehicles revived demand. Sales in the six months beginning Oct. 1 may drop 23 percent from a year earlier after the subsidy program ends Sept. 30, according to a forecast by the dealers association. July’s surge “is definitely due to buyers rushing in” before the subsidy program expires, said Michiro Saito, in charge of general affairs and statistics at the association.

The Seven Thrones Monastery

The Osenovlashki monastery The Virgin Mary, or as it is better known – The Seven Thrones monastery, is one of the most interesting monasteries in Bulgaria. It is located in the upper stream of the river Gabrovnitza, in the western foot of the Stara Planina mountain. It is dated back to the IX century, when a group of Slavonic tribes settled in these lands. Most of them came from the region of Besarabia. The legend says that the monastery was built by seven boyars or seven brothers. That is why its church consists of seven separate rooms/chapels. The church, such as it is nowadays, was built in 1825 and represents a cruciform, three-apse building with a cylindrical dome. Its architecture is unique.

On that day:  Zahari Stoyanov