SOFIA, Bulgaria — Bulgaria has canceled the privatization of its state-owned defense group VMZ Sopot owing to a lack of investor interest, the privatization agency announced Jan. 14.
The sole bidder for VMZ, the Bulgarian firm Emko, submitted a binding offer but did not pay a required tender deposit by the deadline on Jan. 14, privatization agency chief Emil Karanikolov told state BNR radio.
“Due to the fact that this was not done, our sole legal move was to cancel the privatization procedure,” he said.
Emko’s offer reportedly would also have involved massive layoffs at the plant, which runs counter to the government’s privatization strategy, Karanikolov added.
Bulgaria’s biggest defense firm and the last one that is state-owned, VMZ was put up for privatization in July. Although far from its communist-era glory, the company still produces a broad range of missiles and artillery ammunition, in addition to civil-use machinery and household appliances.
However, VMZ’s 3,328 workers have staged several strikes in recent weeks to press their demands for unpaid salaries, social security and health care payments.
The options now before the indebted company are insolvency or a fresh attempt at privatization, Karanikolov said Jan. 14.
A lack of strategic investors in previous defense company tenders led other state-owned firms to morph into joint-stock companies, owned primarily by their managers and staff.
Bulgaria’s defense industry exports stood at 300 million euros ($400million) in 2011, according to the economy ministry.