Bulgarian Posts set for massive restructuring

Bulgarian Posts will be restructured into a holding of six shareholding companies, which will draw on the public private partnership model, and will appoint a second executive director to represent the interests of attracted strategic investors, a copy of the corporate restructuring strategy, leaked to Dnevnik daily reads.

The company’s executive director Entseslav Harmandzhiev has already briefed the leaders of Bulgarian trade unions about the plans.

According to the strategy, restructuring would be implemented by October 1. It will result in the formation of the companies Finance Post, Bulpost/EMS, Post Trans and Trade, Bulgarian Philately, Hybrid Post and Post Tourist. All companies will attract strategic investors and will be forming public-private partnerships.

Bulpost / EMS will take over the courier postal services business, both inbound and outbound. Finance Post will be in charge of financial services (postal cash transfers and cash collection). Hybrid Post will offer utility payments. Post Trans and Trade will tackle logistics and commercial activities, whereas Bulgarian Philately – the business with envelopes and stamps.

The sixth company, Post Tourist, will operate the vacation sites owned by Bulgarian Posts. This type of activity is an attempt to diversify the range of Bulgarian Posts services. Currently, the holding owns seven holiday sites worth a combined 20 million leva. They are located in Golden Sands, SS Konstantin and Elena, in Bankya, Pancharevo, Ravda, off Batak dam and Apriltsi village.

None of the six shareholding companies will be dealing with the universal postal service, letter distribution. According to the Postal Services Act, Bulgarian Posts EAD is obliged to offer the universal postal service nationwide at low prices. According to Harmandzhiev, it would be operated by the parent company Bulgarian Posts.

Bulgarian Posts will be restructured into a holding of six shareholding companies, which will draw on the public private partnership model, and will appoint a second executive director to represent the interests of attracted strategic investors, a copy of the corporate restructuring strategy, leaked to Dnevnik daily reads.

The company’s executive director Entseslav Harmandzhiev has already briefed the leaders of Bulgarian trade unions about the plans.

According to the strategy, restructuring would be implemented by October 1. It will result in the formation of the companies Finance Post, Bulpost/EMS, Post Trans and Trade, Bulgarian Philately, Hybrid Post and Post Tourist. All companies will attract strategic investors and will be forming public-private partnerships.

Bulpost / EMS will take over the courier postal services business, both inbound and outbound. Finance Post will be in charge of financial services (postal cash transfers and cash collection). Hybrid Post will offer utility payments. Post Trans and Trade will tackle logistics and commercial activities, whereas Bulgarian Philately – the business with envelopes and stamps.

The sixth company, Post Tourist, will operate the vacation sites owned by Bulgarian Posts. This type of activity is an attempt to diversify the range of Bulgarian Posts services. Currently, the holding owns seven holiday sites worth a combined 20 million leva. They are located in Golden Sands, SS Konstantin and Elena, in Bankya, Pancharevo, Ravda, off Batak dam and Apriltsi village.

None of the six shareholding companies will be dealing with the universal postal service, letter distribution. According to the Postal Services Act, Bulgarian Posts EAD is obliged to offer the universal postal service nationwide at low prices. According to Harmandzhiev, it would be operated by the parent company Bulgarian Posts.

Expectations are that private capital will mainly be interested in the three most profitable postal activities – financial services, the hybrid and high-speed post. Should capital hikes be allowed, it was likely that these subsidiaries would become majority owned by private investors in full, Dnevnik said, quoting industry sources. Currently, Bulgarian Posts is in the list of companies banned from privatisation.

Asked to comment, Harmandzhiev said that there would be no privatisation or re-distribution of property. Rather, through a public-private partnership, the holding will give investors the right and partners the right to use its assets, receiving in return a share of the profit, which will come from foreign know-how and investments.

He argued that all six companies would be equally attractive to potential investors. According to Harmandzhiev, the idea to restructure the posts is not new. Last year, he told trade unions that the posts will become a holding structure.

According to the annual report of Bulgarian Posts, universal postal services account for 45 per cent of all revenues, with another 48 per cent coming from commercial activities. The remainder is generated by non-universal postal services.

In 2006, the company reported net profit of nine million leva on revenues of 135 million leva. The company is yet to post its consolidated report for the year 2007.