Paloma said it had picked Erste Group bank and the consultancy P&S capital as financial advisers for recapitalisation. The law firm Odvetniki Šelih & partnerji was picked as legal adviser.

The financial advisers will "propose the best method and time of recapitalisation, organise the procedure for the selection of investor or group of investors, propose and invite all potential investors, and prepare the documentation."

Paloma is one of 15 companies earmarked for privatisation by the outgoing government, three of which have already been sold.

The company, which is in majority ownership of the state-owned PDP, has been half-heartedly on sale for almost a decade but none of the previous attempts - the last one coming in 2011 - came very far.

The company ended 2013 with sales of EUR 84.1m, down slightly over the year before, but it posted the first net profit in four years, a modest EUR 130,000.

In the first six months of this year revenue rose 9% to EUR 44m and pre-tax profit stood at EUR 1.4m.

There are several companies that have been mentioned as potential investors every time privatisation has come up, most notably Drenik ND from Serbia and Slovak Hygienic Paper.

This time around, Emkaan, a Dubai-based firm which recently acquired the Papirnica Radeče paper mill, has indicated it was interested in bidding.