Muscovites See Sweet Deal in Candy Factory Selloff

As a schoolgirl in dictator Josef Stalin’s time, Yevgenia Levitskaya did party-inspired “volunteer” work Saturdays on the Bolshevik Confectionary Factory assembly line, smuggling home all the sweets she could.

Many Muscovites such as Levitskaya, now a retired accountant, grew up with a fond attitude toward the city’s biggest supplier of cakes and cookies. And so when the crumbling red-brick factory passed from state control this week, hundreds lined up to buy shares of its stock.

“Sweets will always be in fashion, people will always have birthdays and there will always be holiday parties, so I guess the factory must be profitable,” Levitskaya said Thursday, expressing the way many Russians look at things these days. “I’m counting on big dividends.”

Founded in 1856 and nationalized during the Bolshevik Revolution, the candy factory is the first big state company being sold off bit by bit in exchange for the 10,000-ruble vouchers issued free to all Russians since Oct. 1 under the post-Communist government’s free-market reforms.

As President Boris N. Yeltsin squares off for a showdown in the Kremlin with legislative critics of those reforms, the rush to invest in the factory reflects a budding interest in grass-roots entrepreneurship that may give the selloff program a life of its own.

“Regardless of politics, privatization is in full swing,” said Dmitri Vasiliev, chairman of the State Property Committee, as he opened the public sale, which closes Dec. 24. “It is becoming irreversible.”

The government has privatized nearly 14,000 state stores this year. It plans to sell 6,000 larger firms in 1993 in exchange for vouchers, which now have a face value of $22 each, and start auctioning off land.

Despite a no-confidence vote in his economic leadership by the Congress of People’s Deputies, Acting Prime Minister Yegor T. Gaidar insisted Thursday that such reforms will go forward.

To ensure that the voucher-for-equity swaps started smoothly, the government chose a showcase company with high visibility and sound finances. Bolshevik, whose name survives because of brand recognition, fit the description. It produces 250 tons of sweets a day and corners 40% of Moscow’s cookie market.

As in other factories throughout Russia, managers and workers at Bolshevik resisted privatization, fearing they would lose control. The government swayed them by selling 51% of the company’s shares to the 2,176 employees at a discount, giving them another 5% outright and prohibiting any one outside shareholder from buying more than 5%.

The remaining 20,000 shares are being offered to the public in a bidding system that offers prospective buyers two choices: to state the maximum price per share they are ready to pay, or to list the number of vouchers they want to convert into shares regardless of the price. The share price will be determined by the number of bidders choosing the second option.

Galina Kaplunova, the plant’s chief economist, showed up at the auction along with other Bolshevik workers to buy as many additional shares as possible. “We’re a very stable crew,” said the 34-year plant veteran. “It will be hard, but we must stay together and protect ourselves.”

Asked how many vouchers she brought, Kaplunova said: “That’s a secret I share only with my granddaughter.”

Tasia Sasina, 65, just retired from a chemical equipment plant, decided not to invest her voucher this time. She said she lives near the hall and will come back for information on the 40 other companies soon to be auctioned there before deciding which is most promising.

It is a choice she will weigh heavily.

“We have lived so many years without success,” she said. “Now we have a chance. It’s a shot in the dark, but we have to take it. When you’re this old, you cannot wait.”