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O. Donev: I did not manage to purchase as many shares of Sopharma as I wanted to

24 January 2013

If Sopharma does not place orders with Bulgarian Rose – Sevtopolis, within a year the company will appear on the news like VMZ Sopot, said Donev Mr. Donev, you announced that you bought part of the shares sold during the last few days. A view was expressed in the forum that the buyers wanted to purchase more shares but the seller had no more shares to sell and that was why the shares of Sopharma rose. Are there any more shares for sale? Unfortunately, I myself couldn’t buy as many shares as I wanted to. The demand was huge, there were many who wanted to buy, and not everyone of us reacted quickly enough. It was clear that again that the interest was much higher and could not be satisfied by offer of this package on the market. When such attractive proposals appear, the situation is like in sport: the fastest win. On the other side, I think such big transactions cause market distortions for long periods of time, and now we will wait for them to normalize. Are you ready to purchase more shares?

The more interesting question you and I should ask is whether anyone is ready to sell more shares at these levels. When will the plant at Ilientsi be put into operation and what is not ready yet for the start?

Proper openings are made when the weather allows and not at freezing temperatures. We expect in February and March to get all documents required for putting the plant into operation, and we will make the official opening, as I already said, in the coming warmer months. For the present, there is no deviation from the initial plan for the plant to start operating during the first half of 2013. The plant will increase your capacity by 92% according to a document by a Hungarian analyst, do you need this capacity? In our case, it is more correct to talk about the last stage of modernization of our production capacities. By this investment, we will complete the whole change of the company face.

To a large extent, the new plant will replace our existing capacities. According to the same analyst, Tabex is your long-term generator of profits, as it is expected the official authorities in Great Britain to prefer it to a more expensive analogue. To what extent

Tabex is a key product for you?

Tabex is one of the ten most important products in Sopharma’s portfolio the more so that it is an original product for the company and furthermore this is a phyto product which makes it unique. It is not correct to say that it is a major long-term generator of profits but we can say with certainty that compared to the other products in the group Tabex has a large unrealised potential. Probably, the analysis you are talking about is based on the publications concerning Tabex in prestigious medical journals that compare it to other products, which can be used for treatment of nicotine dependence. Indeed, these journals make conclusions regarding the efficacy and the significantly lower expenses for treatment with our product. You have probably read the analyses for Sopharma made by KBC Securities, Elana Trading, FFBH and EquityPrivate? Some say that the price is estimated to about 2 lv., another – 6 lv. per share, what is the truth according to you? Ultimately, the truth is provided by the market.

The differences in the conclusions of these analyses are due to different hypotheses. In the case with Elana for instance, the company is considered in the long run, in other cases the conclusions are based on speculations which turned out to be out of date.

The analyses show that the debt of Sopharma is rapidly increasing, considering also the new plant, is there a reason for concern? Precisely due to the investment in the new plant which is the largest one in the history of our company, it is logical to think that this year is one of the peak ones in this regard. After all, a small number of Bulgarian companies can boast with a production investment of such an amount in times of crisis. There is an argument among shareholders of Sopharma and Bulgarian Rose - Sevtopolis whether the proposed ratio of substitution is fair or whether it is in favour of one of both shares. Some say “if it wasn’t for Sopharma, Sevtopolis would have went bankrupt by now”, other say „that does not concern us, the current parameters of Sevtopolis require better ratio of substitution of its shares“, where is the truth in this argument? If Sopharma does not place orders with Bulgarian Rose – Sevtopolis, within a year the company will appear on the news like VMZ Sopot.

It’s condition was the same, when we decided to invest in its shares. Our goal is not to harm minority shareholders but it is not logical owners of very small number of shares to expect that all should be done for them to be happy, while at the same time many other shareholders are harmed. Now Sopharma has two major shareholders plus the pension funds. Is this shareholding structure stable?


Why the Board of Directors proposes to the General Meeting of Shareholders (GMS) to decrease the minimum threshold for repurchase of 1-lev shares?

Is this related to your expectations? The reason is simply due to the fact that the nature of our stock market requires quite frequent GMS convening with regard to these decisions. At this meeting we proposed to the shareholders to empower the management to purchase shares at favourable conditions. When can we expect you again with an opinion in Comments of Investor.bg? When I have a bit more free time, when I will be able to answer even questions regarding my shoes as well. Until recently I didn’t think that this matters but, as a matter of joke, I am thinking of buying sneakers. Source: Ivnestor.bg