Russian investor tries to halt BTC sale

By bne IntelliNews November 3, 2015

bne IntelliNews -


A mysterious Russian investor is trying to stop the sale of Bulgaria's largest telecom by revenue, which was announced by Russia's VTB Capital last week, by claiming that he is the rightful owner and the sale is illegal.

Dmitri Kosarev sent an open letter on November 2 to Bulgaria's Prime Minister Boyko Borissov and Prosecutor General Sotir Tsatsarov in which he claimed that his company Empreno Ventures owns 76% of Bulgarian Telecommunications Company (BTC), which operates under the brand name Vivacom. In the letter, Kosarev argues that VTB Capital, the investment banking unit of sanctions-hit state-owned financial group VTB, is pursuing the sale of BTC in a “non-transparent manner without real competition and in disregard to the rights and interests of the current shareholders in Vivacom”.

He threatened to take action against the Bulgarian state unless it intervenes: “As my shareholding rights are prejudiced by the actions of VTB Capital but also the lack of response and active stance by the Bulgarian authorities, I and my companies will be forced to bring all and any claims, in all and any jurisdictions, to recover damages caused by all stakeholders in this – VTB Capital, Bulgarian authorities and any other,” Kosarev wrote, while asking for an immediate meeting with top officials from the Bulgarian government and the prosecutor's office.

Kosarev also claims he had earlier proposed to VTB Capital and Ernst & Young (the lead manager of BTC's sale) the refinancing of the unpaid €150mn loan that has prompted VTB to seek to put BTC up for sale.

Meanwhile, VTB Capital insisted that it has the right to recover the amount it is owed by BTC and claimed the entire process had been fair and transparent.

"The loan defaulted because the main owner got himself in trouble and the company was not able to refinance through either equity or debt. VTB Capital offered a refinancing package ourselves but did not receive support from shareholders; hence we are enforcing," Milen Veltchev, CEO of the Bulgarian unit of VTB Capital, said in a statement sent to bne IntelliNews on November 3.

BTC has been fought over since its owner, Bulgarian oligarch Tsvetan Vassilev, fled to Serbia after his banking empire collapsed amid fraud claims.

Kosarev has accused Veltchev, a former Bulgarian finance minister (2001-2005), and his brother, Georgi Veltchev, of trying to acquire  BTC cheaply. Veltchev's VTB is also one of the bidders for  BTC, while at the same time it already claims to hold 100% of the telecom, which was security for the €150mn loan to BTC's parent vehicle, InterV. 

Kosarev is not known as a shareholder of BTC. However, he states that Empreno owns 100% of a Luxemburg-registered company, LIC Telcommunications, which owns 43% of BTC through a chain of wholly-owned subsidiaries. In addition, Kosarev claims that Empreno is the actual owner of the 33% stake held by VTB Capital, although it “nominally belongs to Crusher Investment”, a Guernsey-registered subsidiary of VTB Capital.

"In principle, Crusher should hold this 33% only technically (nominally), in trust for my company Empreno, as this ownership follows from a total return swap agreement (TRS), payments under which with Crusher were completed long ago – during the time of Tsvetan Vassilev, previous owner. Currently, this 33% should also belong (indirectly) to Empreno," Kosarev writes.

The 43% stake the Russian investor says he owns is exactly equal to the stake held by Vassilev. Information about a sales transaction, however, has not been disclosed.

In March, Vassilev said he sold his 43% stake in BTC, as well as majority stakes in five other Bulgarian companies, to Belgian investor Pierre Louvrier, for the token price of €1. Louvrier also took on €900mn in debts. However, in July, Louvrier handed back the assets to Vassilev.

Capital Weekly has linked both Louvrier and now Kosarev with sanctions-hit Russian billionaire Konstantin Malofeev.


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