What a waste

Atanas Bobokov was detained and has been held in police custody for a month. His brother Plamen was also there for a short time, and in addition to his detention, the Prosecutor's Office started publishing selected messages from his mobile phone, contrary to any legal precedent.

The messages said to have been sent to public officials led to the launch of a parallel investigation for influence peddling. The benefit for the Bobokov brothers from these messages is unclear, suggesting that the real target of the Prosecutor's Office might be different.

Why is that happening?

The Bobokov brothers have a huge and profitable business and there may be a certain appetite to lay hands on it. The attack against them may also be a by-product of the meandering case of illegal waste imports from Italy, in which the Prosecutor's Office might have decided to go after more convenient targets, instead of the leading figure there - Hristo Kovachki.

"The accusations against the Bobokov brothers arouse skepticism. These are people of good repute, who have not appeared in the criminal chronicles for 30 years. They invest in a rather complex technological business, providing a lot of added value for the country, and compete on the global market," says Tihomir Bezlov, a political analyst at Sofia-based Center for the Study of Democracy. "The allegations relating to criminal imports cannot be serious, because I know their partners - they make a very detailed check of the reputation of all people they affiliate with and cannot afford having partners involved in crimes".

Plamen Bobokov explains to Capital Weekly: "To run the battery plant in Montana, where we have 600 employees, we need lead. We import scrap lead, which we make in Italy, not waste. We have a large structure for collecting used batteries, their separation, processing and, accordingly, their provision in semi-finished form for processing in Bulgaria for the production of lead, which goes to the production of batteries. Thus, we procure 50% of the raw material for Monbat. And we've been doing this for 20 years."

Now what?

The prosecutors' attack on the Bobokov brothers will probably end with a defeat in court, as has been the case with many highly publicized investigations of recent years. The only tangible result thereof would be a shift in positions in the sectors in which Monbat and Prista Oil operate or a direct hit on a well-performing business.

The Bobokov brothers are aware of the consequences. "I can't understand why our business had to be destroyed this way. We have manufacturing companies in eight countries. We bought this one in northern Italy so that we can use the Italian potential. This accusation puts an end to our production. Even if they acquit me, I will be unable to provide employment to the people in Vratsa. I understand business - I am 60 years old," Atanas Bobokov said in court.

The Bobokovs' business

The first family company, Bobokov and Sons - Stoil Bobokov, was registered in the early 1990s. Over the next years, more companies were established with diverse activities, including Prista Oil in 1994. Initially, it started as a trading company and later built its own blending factory for motor and industrial oils.

The key to their rapid success is largely the bankruptcy of Pleven-based Plama - the largest motor oils and lubricants producer in the country at the time. As a result, the Prista Oil brand quickly expanded, with its market share reaching 50% in 1996-1997.

In 1998, Prista Oil and Acumicar-98 (a company set up by employees of idled battery factory Acumicar) jointly bought 72% of Acumicar for $3.375 million with a ten-year deferred payment from the government's Privatization Agency. The assets of Acumicar formed the basis of today's Monbat.

Prista Oil acquired 26%, and Acumicar-98 - 46%, respectively, in the deal with the Privatization Agency. The following year, Prista Oil expanded its stake to 90% by increasing the capital of Alumicar by 640 million old Bulgarian levs (640 thousand levs today. The stakes held by Acumicar-98 and the state dropped to 6.2% and 3.7%, respectively.

Production at the factory located in the city of Montana was restored and unlike many other privatized plants in this period, it developed rapidly.

In 2007, the newly purchased plant for car batteries Start in Dobrich was added to the main site in Montana. The company was also trying to diversify its classic production of lead-acid batteries. In 2017, two German companies, manufacturers of lithium-ion batteries, were purchased. In 2019, Italian engineering company STC was acquired, which is expected to generate synergy in the implementation of new recycling technologies.

The expansion of Prista Oil over the years has been supported by a number of well-known foreign partners. In 2000, Texaco acquired a 25% stake, in 2006 it was replaced by a financial investor - the U.S. Gramercy Emerging Markets Fund, and at the same time, Monbat became publicly traded, raising 33 million levs. In 2012, a new restructuring followed, bringing in private equity firm ADM Capital and the European Bank for Reconstruction and Development as minority shareholders. In 2016, the Bobokov brothers bought back their shares and now they fully control the Prista Oil Holding.

Their share in Monbat is about 50%, and they still have foreign and local partners - over 20% share belongs to a company of the EBRD and CEECAT Capital (which separated from ADM Capital). Several Bulgarian pension funds also own stakes, including market leaders Doverie and Allianz. The turbulence surrounding the arrests of the two brothers is damaging indirectly the pension savings of millions of Bulgarians. Monbat also has a bond issue, the liabilities on which are valued at about 50 million levs. It is subscribed by many institutional investors.

Other victims of the surprising attack on the Bobokov brothers may be the creditor banks of the group. In 2016 the brothers purchased the stakes held by minority shareholders through Prista Invest 2016 - deal financed with a 50 million euro loan from Unicredit Bulbank. The liabilities of Prista Invest 2016 exceeded 56 million levs at the end of 2019.

Monbat's financial statements show that the bank owed 83 million levs to several other banks as at the end of 2019 - Raiffeisenbank (18 million levs), Postbank (25 million levs), Hypo Noe (25 million levs), DSK Bank (13 million levs), as well as about 3 million levs in lease liabilities to UBB Interlease