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Balcan Capital Management

Open Letter

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Open letter from Pravin Banker to Sergi Stanishev, Prime Miniter of Bulgaria


Author's note:

We were inspired to send this open letter to the Prime Minister last week because of the current global crisis which, we fully anticipate, will hit Bulgaria with gale force like a Tsunami. It is a self-evident reality that the rapid growth in Bulgaria in the years 2005-2007 were triggered by leveraged real estate boom, lead by foreigners primarily the British and the Irish. They are gone and many of the properties they purchased on credit from banks like Allied Irish, amongst others, likely in default. REIT's and Bank shares, in Bulgaria and overseas, are under extreme pressure and may not recover for 3 to 5 years and those highly leveraged, likely to collapse. As one of the few large manufacturing enterprises left in Bulgaria, the resurrection of Kremikovtzi provides a rare opportunity to restore an economic balance, and reduce the over-dependence on Real Estate. We agree with the Prime Minister's repeated insistence that Kremikovtzi is in the National Interest, as indeed it is, and saving it should be of paramount interest to the governing coalition. Through this letter we urge the Prime Minister to rise to the occassion The public has not forgotten that period a dozen years ago when asset values and savings in Bulgaria, built up over decades, were systematically destroyed within a very short period. Being passive on the presumption that EU membership buys insurance will not save Bulgaria from a repeat performance. Bulgaria must assume control of its own destiny.....