June 20, 2012
The FIDE President has acquired Petrol Holding

Kirsan Ilyumzhinov says that it’s a good bargain to acquire Petrol Holding as Petrol takes a monopoly on the Bulgarian market of petroleum products.

Kommersant reports that the president of the International Chess Federation (FIDE) Kirsan Ilyumzhinov has bought 52.5% of the Bulgarian Petrol Holding, which has 361 stations, 80 oil storage tanks and three port terminals, hotels, casinos and even airline. Financial details of the deal were unknown to the public. According to analysts’ estimates, the value of oil assets is about $ 1 billion, but the company has huge debts, the customer of the company has obligations to give large investments in modernization of petrol stations. However, Kirsan Ilyumzhinov intends to increase the share in Petrol to 100%.

A Swiss Credit Mediterranee owned by the president of the World Chess Federation Kirsan Ilyumzhinov has acquired 52.5% of the Bulgarian Petrol Holding, which has a monopoly position in the oil market in Bulgaria. Holding shares were acquired from the businessmen with Russian origin Denis Ershov (47.5%) from the Baltic and Alexander Melnik (5%) from Austria. A former partner of Denis Ershov Mitko Sybev controled the remaining 47.5% of the company. Kirsan Ilyumzhinov informed Kommersant, the next few days he would bring its stake in the holding company to 100%.

Mr Ilyumzhinov explains that since 1993 he has had friendly relations with Bulgaria, held a variety of activities, including the world chess championship between Veselin Topalov and Gata Kamsky, and each time he has got a lot of offers from local businessmen to invest. He considers acquisition of Petrol Holding to be very good bargain, as Petrol has a monopoly on the Bulgarian market of petroleum products.

Ilyumzhinov says Petrol controls all 80 existing oil depots in Bulgaria, 361 petrol stations (one-third of all petrol stations in the country) and three port terminals, including Burgas and Varna, through which all the oil is coming into the country. In addition, Petrol Holding has hotels, own payment system, the football club, three stadiums, casinos, five airplanes and "many other assets."

Financial details of the deal are not divulged to the public - Kirsan Ilyumzhinov assured that it was the terms of the agreement. As Denis Borisov from Nomos Bank explained in Bulgaria one petrol station could be estimated about $ 700 thousand, therefore the whole Petrol network costed about $ 250 million. Oil depots could cost $ 10-20 million taking into consideration a poor state of oil refining in Europe. The analyst estimated Petrol oil assets approximately $ 1 billion.

However, the former executive director of Petrol Tsvetan Dimitrov who was a consultant in terms of the deal with Mitko Sybev stated that holding debts exceeded the value of its assets. Mr Dimitrov thought a deal with a Russian investor was worth it as the new investors would be able to stabilize the company in contrary to the current ones. He added that according to the agreement the customer had to provide large investments  in the reconstruction of petrol stations and other facilities of the company.

Petrol Holding was privatized in 1999. In 2001 Lukoil acquired some petrol stations making an agreement with Petrol to supply petroleum products through the only oil refinery in Burgas  owned by him. In 2007 Lukoil was forced to go to court of Sofia because Petro failed to fulfill obligations. Kommersant’s informant said that recently it had been offered to sell Petrol repeatedly. In particular, in 2010 Gazprom neft inquired to acquire a network of 200 Petrol stations. But Petrol had conflicts among shareholders resulting in a failure of the deal.

Kirsan Ilyumzhinov was approved as a customer by all the shareholders. However, market specialists said that in Bulgaria the Russian investor had other risks with antitrust regulators. In Bulgaria there are the Russian Lukoil Bulgaria, Austria's OMV, the Anglo-Dutch Royal Dutsch Shell, Kazakh Rompetrol and Greek EKO network (a subsidiary of Hellenic Petroleum) however Petrol has a monopoly position controlling the oil depot and port terminals. Recently, leadership of the Commission on Protection of Competition in Bulgaria has confirmed the investigation of violations on the fuel market of the country in which the largest companies are involved, among which Petrol is mentioned. Analysts can not say what sanctions will be applied to Petrol by the Commission on Protection of Competition in Bulgaria.