14.08.2024 Statement of Bulgarian Development Bank

With reference to the speculations regarding the sale of the shares of PatstroyEngineering AD, we would like to provide the following information:

Bulgarian Development Bank (BDB) signed a loan agreement with Rodway Construction AD to finance the acquisition of 5 112 240 shares of the equity of PatstroyEngineering AD from its majority owner (seller) Bio Mining AD on June 17, 2019. The biggest share in the collateral with highest value was the pledge of the shares of PatstroyEngineering AD and the pledge of its entire commercial enterprise.

In mid-2022, due to non-compliance with the payment obligations under the loan agreement, BDB undertook actions on the commercial enterprise under the Registered Pledges Act and appointed a manager of Roadway Construction AD, as well as new management of PatstroyEngineering AD, in an effort to stabilize the company, which was the sole asset and possible source of loan repayment.

Having found that the steps for collection and protection of the bank's interests were ineffective, BDB performed а detailed analysis and prepared an action plan. As a result, it was found that the sale of the company's shares was the only possible way of recovery.

In 2024, the present BDB management started the procedure to sell the shares under the Commercial Act by conducting five consecutive open tenders, thereby ensuring full transparency of the procedure. The announcement of the tender with an initial price of BGN 8 900 000, formed on the basis of an independent external valuation of the company, made it evident that the loan was practically unsecured and the bank could not recover a large part thereof. The first four tenders were not successful due to the lack of applications. In the last tender, held on July 30, 2024, an application was received from one bidder, Ariete Capital Ltd, which was declared the buyer at a price of BGN 3 645 440.

To comply with the initiated pre-trial proceedings, the bank has fulfilled its obligation and has handed over the original loan documents to the competent authorities, therefore the auction could not be finalized.

The BDB has submitted signals to the judicial authorities in connection with the exposure, including under the instance control procedure, the bank submitted a request to the Supreme Prosecutor's Office to cancel the rulings of the Appellate Prosecutor's Office - Sofia and the Sofia City Prosecutor's Office.

As a result of the BDB's actions, the pre-trial materials have been returned for further investigation, and the Bank continues to fully cooperate with the law enforcement authorities in the case. Thanks to the consistent efforts of the present BDB management, full transparency of the institution has been ensured, effective controls have been put in place, and the possibility of appropriation of fund under the provided lending has been prevented. 

14 August 2024