site.btaBDZ Will Not Sell Assets after Creditors Had Its Accounts Frozen by Court

Sofia, May 31 (BTA) - The Bulgarian State Railways (BDZ) issued a press release on Thursday denying media reports that assets of the national rail carrier will be auctioned off in connection with a preservation of its accounts by creditors.

According to the top story in Thursday's "Douma", creditors have obtained a preservation order for the accounts of BDZ Passenger Services over about 60 million leva in principal payments and 30 million leva in overdue interest payments and threaten to sell more than 1,200 carriages of BDZ Freight Services and all 25 Siemens Desiro multiple unit passenger trains by which the loan is secured.

The BDZ press release specified that two of the creditors under the Second Bond Issue have indeed brought an action against BDZ Passenger Services before the Sofia City Court for 40 million leva principal of the loan, and the court allowed part of the claim, amounting to 20 million leva, in favour of the bondholders, as a result of which bank accounts of the company have been attached.

The 240 million leva Second Bond Issue was contracted in 2007 to refinance outstanding obligations to various institutions for current maintenance of freight cars. At this point, the balance due under the bond issue is 103 million leva, the rail carrier said.

The bondholders are rightfully entitled to claim their receivables through the courts. The Sofia City Court judgment and the provisional attachment of the accounts will not impede the company's functioning at this point, provided that a solution to the situation is found in the short term," the press release says.

Transport, Information Technology and Communications Minister Ivaylo Moskovski has been promptly informed of the situation and has relayed the information to the Finance Ministry, requesting an activation of the State aid which has been approved by the European Commission. The Finance Ministry is expected to come up with a decision.