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Left out in the cold

Not a good start to the year for investment banks in eastern Europe. The advisory role for the $1 billion sell-off of most of Bulgaria's petrochemicals industry was up for grabs.

The fees on this deal will be huge, and it would be good for business to be associated with the return of recession-hit Bulgaria to the privatization mania of the region.

But the top players in the region, such as Deutsche Morgan Grenfell, ING Barings and Credit Suisse First Boston, were beaten by the bean-counters of accountants Arthur Andersen.

The deciding factor in Andersen winning the mandate may have been the firm's familiarity with the workings of the oil business and its contacts with potential trade buyers. "The Bulgarians were especially interested in finding a strategic investor who could bring in not just cash, but also technical knowhow and a willingness to restructure and improve the business," explains Paul Rathbone, a partner in Andersen's corporate-finance division.

The privatization involves Neftochim, the largest refinery in the Balkans and the only one in Bulgaria which is still operational, and Petrol, a retail distribution company that owns 80% of Bulgaria's petrol stations. Several big oil and gas producers such as Shell, Elf Aquitaine and Mobil have shown interest and are exactly the type of buyers that the Bulgarians are seeking.

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