Three suitors bid for Bulgarian telecom company BTC

By bne IntelliNews November 13, 2015

Three investors have filed binding offers for Bulgaria’s largest telecommuncations operator by revenue, Bulgarian Telecommunications Company (BTC), by the November 12 deadline, Capital Daily reported, quoting various unofficial sources. 

The investors willing to buy the heavily indebted company include Greek Olympia, owned by Panos Germanos, the former CEO of the Germanos retail chain, in a consortium with US hedge fund Third Point; Mark Schneider, the co-founder of leading European cable group UPC, backed by US private equity fund CVC; and Bulgarian businessman Spas Rusev, known for his close relationship with former Bulgarian prime minister Simeon Saxe-Coburg-Gotha and some of his ministers.

The sale of BTC, which operates under the brand name Vivacom, was recently launched by VTB Capital, the investment banking unit of the sanctions-hit Russian state-owned financial group VTB. Actually, it is selling the Luxembourg-registered vehicle InterV Investment, which owns, through two subsidiaries, 100% of BTC. InterV defaulted already in May on a €150mn loan owed to VTB Capital, which was secured via a share pledge over 100% of the shares of InterV.

According to speculation, reported by Capital Daily, Rusev will most likely win the auction for BTC, scheduled for November 19. Allegedly, Rusev is backed by VTB Capital, whose Bulgarian unit is headed by Milen Velchev, the finance minister in the Saxe-Coburg-Gotha cabinet of 2001-2005.

The starting price at the auction to be held in London will be equal to the highest of the three already filed offers. The bidders must also make a deposit in order to participate in the auction

The minimum amount VTB Capital has to recover is over €180mn – the defaulted loan plus interest and fees. In addition, the Bulgarian state has imposed distraint on InterV’s shares as part of its efforts to recover some of the BGN3.66bn (€1.87bn) paid to guaranteed depositors at the collapsed Corporate Commercial Bank (Corpbank). According to the daily, the Bulgarian authorities will seek at least €120mn-180mn from the BTC sale.

Corpbank's majority owner, Tsvetan Vassilev, also owned 43.3% of BTC. However, he claims to have sold that stake to Russian investor Dmitri Kosarev, who is trying to stop the sale of BTC, claiming that it is fraudulent. Kosarev also insists that he is the rightful owner also of the 33.3% stake known to be owned by VTB Capital.

BTC’s Ebitda fell 8.2% y/y to BGN219.5mn in January-September, whereas revenue grew 4% y/y to BGN624.8mn. BTC is formerly the state-owned monopoly and still the largest player in the fixed-line segment in Bulgaria. It is also the third largest mobile operator, after Telekom Austria's Mobiltel and Telenor Bulgaria.

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