Bulgaria’s Vivacom reportedly to buy minority stake in parent for €43mn

By bne IntelliNews February 17, 2017

Bulgarian Telecommunications Company (BTC), the country’s largest telecom firm by revenue that operates under the brand name Vivacom, is reportedly planning to acquire a stake of between 10% and 15% in its direct owner, Viva Telecom Bulgaria, for €43mn. 

Vivacom will buy a stake in Viva Telecom Bulgaria from InterV, the parent company's owner, Capital Daily reported quoting two sources. The deal will enable the transfer of funds from Vivacom to its final owners, Bulgarian businessman Spas Roussev (46% stake), sanctions-hit Russian financial group VTB (20% minus one share) and the managers of the Bulgarian unit of VTB Capital – the brothers Milen and Georgi Velchev, as well as Krassimir Katev (combined 19%).

Roussev is best known for his close relationship with Simeon Saxe-Coburg-Gotha, Bulgaria’s last king and its prime minister from 2001 to 2005, and some of his ministers, including Milen Velchev, who was finance minister at the time.

In November 2015, Roussev won a tender for BTC with a bid of €330mn. The sales procedure for BTC was launched by VTB Capital, the investment banking unit of VTB, in late August 2015, after BTC’s Luxembourg-based holding company, InterV Investment S.a.r.l. (InterV), failed to repay a €150mn bridge loan, which matured in May 2015.

The deal involved the sale of 100% of shares in InterV, and was successfully completed on August 30. To partly finance the transaction, VTB Bank extended a €240mn facility.

The deal has been attacked in court by Russian businessman Dmitri Kosarev, who asserts that he is the majority owner of BTC, having acquired the shares of fugitive Bulgarian tycoon Tsvetan Vassilev. Vassilev was also the majority shareholder of Corporate Commercial Bank (Corpbank), which collapsed in mid-2014 wiping out €1.88bn of taxpayers' money.

A likely reason the Bulgarian owners are resorting to this scheme in order to receive money from Vivacom, instead of voting for a dividend, is that Bulgaria’s commission for withdrawal of criminal assets has imposed distraint on Viva Telecom Bulgaria, which will be the first to receive the dividend. Moving the dividend further up the chain of Vivacom’s parents will have to be approved by the Bulgarian commission, and this will be slow and uncertain, Capital Daily commented.

Roussev’s consortium has appointed its managers at InterV. However, the attempts to change the management of Vivacom have been blocked by Kosarev’s company Empreno Ventures.

The former state-owned fixed line monopoly, BTC reported revenues of BGN865mn (€442mn) in 2015. The company remains the biggest player in the fixed-line segment in Bulgaria and is also the third largest mobile operator after the local units of two much larger international telecom operators, Telekom Austria and Norway's Telenor.

On September 12, credit ratings agency Standard & Poor's (S&P) Global Ratings raised its long-term corporate credit rating on Vivacom to B+ from B- with a stable outlook. S&P also removed the rating from CreditWatch.

Vivacom has an outstanding corporate bond – a €400mn senior secured note traded on the Irish Stock Exchange. On September 12, S&P also raised its long-term issue rating on the company’s senior secured debt to B+ from B-.

The agency said that while rating upside is remote in the following 12 months, it may downgrade Vivacom if the refinancing risks at the company or at its parent are not addressed by early 2017, or if further decreases in profitability drive the group's adjusted debt to Ebitda to above 4.5x.

In another development, on February 7 the Sofia court of appeal allowed the registration of a pledge of Viva Telecom Bulgaria in favour of VTB as a security for the €240mn loan, Capital Daily reported. The move is significant, because so far all attempts for changes in the boards of BTC and Viva Telecom Bulgaria have been blocked in court by Empreno Ventures. In the case of a default on the loan, VTB will be able to sell 57% of Viva Telecom Bulgaria, as the commission for withdrawal of criminal assets has imposed distraint on the remaining 43% stake.

Related Articles

RBI doubles net profit y/y in Q1 as Russian business recovers

Raiffeisen Bank International (RBI), the second largest bank operating across Central and Eastern Europe by assets, reported that net profit almost doubled year-on-year to €220mn in the first ... more

Bulgarian prosecutors charge former foreign minister in procurement case

Bulgaria's specialised anti-corruption unit has charged former Foreign Minister Daniel Mitov with violating the laws on public finance and public procurement, ... more

Bulgaria’s antitrust regulator allows BAT’s €100mn acquisition of Bulgartabac assets

The Commission for Protection of Competition (CPC) has allowed the €100mn acquisition of assets of Bulgaria’s Bulgartabac Holding by British American Tobacco (BAT), a notice on CPC’s website ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss