HOLLYWOOD STUDIO INCHES CLOSER TO FILM CENTER

UNCLAS SOFIA 000080

SIPDIS

E.O. 12958: N/A
TAGS: EINV ECON KPAO BU
SUBJECT: HOLLYWOOD STUDIO INCHES CLOSER TO FILM CENTER
DEAL


SUMMARY. After a year-long tender process and
sustained Embassy advocacy, privatization of Bulgaria's
state film center by NuImage - a U.S. film production
company - has been approved by The Privatization
Agency's Supervisory Board. While several
administrative steps remain, Hollywood-based NuImage
hopes to take physical control of the studio by mid-
year. END SUMMARY


1. NuImage was one of three final bidders for Boyana
Film Center. It offered the highest bid, a total of EUR
6.250 M (BGN 12.2 M) and vowed first-year investments
of EUR 11.4 M out of a total EUR 15.6 M in investment
plans. Compensation instruments will be paid for 30% of
the shares. Following the initialing of the
Privatization Agreement in August, the contract was
revised to include new conditions imposed by the
Bulgarian Government. Under the terms of the contract,
NuImage is obliged to keep the film center intact and
operating for twenty years. "The privatization
complies with all legal requirements," Teodor Stoev,
chairman of the supervisory council of the
privatization agency, told the Bulgarian National TV
channel. He called the deal the most restrictive that
he has ever seen. The "20-year" clause was introduced
specifically to prevent the buyer from selling off the
studio's valuable real estate.


2. The Embassy has provided advocacy support at every
step of the process by pressing the Government to
follow its own procedures under the Privatization law.
While the Supervisory Board's approval of the deal is a
major milestone in this lengthy and often non-
transparent process, the deal is still subject to
additional administrative steps that could present new
opportunities for mischief by the critics of the deal.


3. The main opponents were the studios current
managing board, which has operated with little
government oversight, as well as parts of Bulgaria's
film-making community. A number of film makers object
to the "action" genre films that NuImage specializes
in, and have also enjoyed access to the studios
facilities. We expect this group to continue efforts
to derail the deal. On the flip side, NuImage has
developed support from the production community and
regularly employs hundreds in technical positions.
"Black Dahlia" a 50-million-dollar production directed
by Brian DePalma and scheduled for release later this
year, was filmed in Bulgaria by NuImage in 2005.
LEVINE