Issue 30: July 25 to 31, 2003
MG restructures its portfolio Business Staff
MG Corporation, one of Bulgaria's biggest business groups, is restructuring its portfolio after the murder of its founder and president Iliya Pavlov in March.
Pavlov was the country's richest businessman, reportedly worth $1.8 billion. He was killed in front of his office in Sofia on March 7 this year by a sniper.The new management, headed by Boyana Popova, recently decided to sell all unnecessary real estate. Four big properties in Sofia have already been put up for sale, sources told 24 Chassa last week. According to the newspaper, the same is going to happen to a dozen stores and offices in the city. This follows the evaluation of these properties by a Sofia real estate agency.The PR manager of MG Corporation, Dimitar Nedkov, refused to comment these sales. He also said he did not know whether Pavlov's sister, Slavka, still worked for MG. According to 24 Chassa, she has left the corporation.In July, the corporation sold its stake in the Stara Zagora scrap metal factory. MG acquired the factory in 1996, paying 124 million non-denominated Bulgarian leva ($2 million). Seventy per cent of the price was paid to the state in long term bonds. Today, 17 per cent of the company is still owned by the state but this remaining stake has also been put up for sale against investment vouchers and compensatory no-tes on the Bulgarian Stock Exchange.
According to 24 Chassa, MG is also conducting a reform of its tourism operations. The corporation will soon resume the building of two hotels in Dubrovnik, Croatia. MG also plans to register its subsidiary, which has changed its name from Inex Goritza Zagreb to MG Adriatic, in central and north Croatia. The Croatia News Digest reported that MG would invest 20-25 million euro in the Libertas hotel, which the corporation bought it in April 2002 for 4.5 million euro.
Not everything in the region has gone as smoothly for MG. The corporation failed in a bid for the Serbian Putnik tourist agency. This was acquired by a US company, which offered $50 million for 70 per cent of the assets. MG was unable to offer more than 11.5 million.
Balkantourist, which manages MG's tourist business is also undergoing structural change to turn it into a modern travel agency. The directors of Balkantourist have sent a questionnaire to the directors of hotels it owns, asking them: "Do you think that you will be more successful in the future, if your hotel is not in the MG business group?"
On June 28, Pavlov's widow, Darina, was appointed to the supervisory board of the Grand Hotel Varna on the northern Black Sea coast, which is owned by MG Corporation. Popova will also enter the hotel's supervisory board, but Balkantourist was excluded from it. The hotel posted a 1.8 million leva accounting loss in 2002, but reported a one million leva revenue in the first quarter of 2003.
MG has also come off worse in a bitter competition with TIM Corporation who got brought 72 per cent of shares in the St. Konstantin and Elena Complex. Despite the company's management repeatedly declaring an interest in the deal, MG was only able to acquire 11 per cent of the shares.
After TIM Corporation's acquisition the Balkantourist CEO, Nedialka Sandalka, was excluded from the resort's board of directors.
Things have also not been good for MG's football club, Chernomore from Varna. Radio Sport recently reported that MG wanted to declare it bankrupt. A businessman from Varna, Ivan Petrov, offered to buy the club for 1 lev to save it from closing down. Since then, another interested has appeared, the 47-year old Georgi Gergov, known in the business circles for his influence in the Slanchev Den seaside resort. He is also owner of one of the biggest hotels in Plovdiv. The investigation into Pav-lov's murder is continuing.