Privatizers for Montenegro Sought by US Commerce Dep't (!)

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Document: Commerce Department Recruits Montenegro Privatizers

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Compiled and provided by the U.S. Department of Commerce's Bosnia/Balkan Task
Force, part of the Central and Eastern Europe Business Information Center
(CEEBIC).

A weekly update of commercial information and opportunities for U.S. firms
interested in Bosnia & Herzegovina, Croatia, FYR Macedonia, Kosovo and the
Balkans.

Compiled and provided by the U.S. Department of Commerce's Bosnia/Balkan Task
Force, part of the Central and Eastern Europe Business Information Center
(CEEBIC).

Montenegro: Seeks Privatization Fund Manager Date: 08/28/2000 6:00:33 PM
Eastern Daylight Time From: CEEBIC@xxxxxxxxxxx (CEEBIC)

Introduction

Montenegro will begin a privatization program which will return formerly
nationalized companies to the private sector. USAID is providing technical
support to Montenegro during the privatization process.

Montenegro has developed legislation and regulations for the privatization
process. Under Montenegrin legislation foreign and domestic investors receive
equal treatment. Foreign investors may convert local currency into foreign
currency. Foreign investors may repatriate profits and capital to their
country of origin and will enjoy a five year tax holiday on corporate
profits.

Privatization

The privatization program will have two phases. In the first, 419,000
Montenegrin adults will receive vouchers from the government. These vouchers,
which repesent the national patrimony, will permit these citizens to bid for
shares of companies being privatized during an auction which will constitute
the second phase. A total of 222 small and medium sized companies will be
auctioned off in the second phase as will 19 large ones. The nominal book
value of the entire privatization program will be 2.3 billion DM.

Instead of bidding for shares directly many Montenegrins may prefer to turn
over their vouchers to privatization funds which will bid for shares,
creating a diversified portfolio of stocks. The voucher holders will receive
units of the fund in exchange for these vouchers.

The government of the Republic of Monetenegro is seeking experienced
portfolio managers to manage these funds. Applicants should be prepared to
demonstrate a record of prior fund managements and present a 3 year business
plan. Successful applicants are required to invest a minimum of 250,000 DM in
the management company.

The Montenegrin government expects that managing the privatization funds
should be quite profitable. The management fee is up to 5 of assets under
management. The fund will play an active role in restructuring companies in
their portfolios. Many of the companies will need to be upgraded in terms of
management and financing. By restructuring these companies privatization
funds should be able to add value to the portfolio over the long term thus
greatly enhancing its market value.

To find out additional information about this project, please contact Mr.
Fletcher Hodges via e-mail at: FHodgesIII@xxxxxxx

***

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