Bulgaria's Vivacom Ownership to Change Hands by End-2012 - ReportBusiness | June 25, 2012, Monday // 12:26| views
Bulgarian incumbent telco BTC, which operates under the brand name Vivacom, was eyeing a Turkish new owner, but the sale deal failed. File photo
The creditors of Bulgaria's incumbent telco BTC, which operates under the brand name Vivacom, may be expected to sell the company by the end of the year, according to insiders.
"Bulgaria, a nation of 7.7 million people has three mobile operators, which are foreign owned and whose ownerships are expected to change hands this year," Capital daily reported.
Bulgaria's first and biggest mobile operator Mobiltel is controlled by Telekom Austria, while Globul is the local unit of Greece's OTE.
Greek group OTE, the biggest telecoms operator in southeastern Europe, announced last week that it plans to sell its Bulgarian units to help refinance EUR 3.4 B debt maturing in the next two years.
Meanwhile Mexican tycoon Carlos Slim made a deal to acquire 21% of Telekom Austria AG, which will translate into changes in the Bulgarian unit Mobiltel.
"BTC sale, the longest awaited deal, is also just about to see a denouement," Capital daily wrote without disclosing any details.
The planned sale of Bulgaria's incumbent telco BTC failed earlier this year after its creditors rejected the offers of all three bidders, including Turkcell, the biggest Turkish mobile-phone company.
Now the lenders are expected to hold restructuring talks, which will aim at securing better terms and reducing the debt, which is burdening BTC, its parent company NEF Telecom Bulgaria and the holding company that owns NEF Telecom.
According to unconfirmed reports some of the subordinated non-performing loans may be transformed into equity capital, others restructured or even written down.
Royal Bank of Scotland, Deutsche Вank, Castle Hill, the European Investment Bank and Raiffeisen Zentralbank arranged EUR 1.3 B of loans to finance Vivacom 's 2007 buyout.
The mezzanine subordinated non-performing loans total EUR 400 M. The mezzanine lenders include French financial group AXA, Austrian investor Mezzanine Management, US Tennenbaum Capital Partners, Darby Overseas Investments, Deutsche Bank and Royal Bank of Scotland.
The creditors hired Morgan Stanley in London last year to help sell the company, after it breached the terms on the loan.
In April 2011 Turkcell emerged as the most likely buyer of the Bulgarian telco, but the deal collapsed after the Turkish operator demanded that a huge part of the price (from EUR 100 M to EUR 200 M) is deposited in an escrow account until the state settles its scores with BTC previous buyers.
The Turkish company reportedly put in a bid of over EUR 870 M.
Earlier reports said the Turkcell valued Vivacom at about USD 1.4 B, but the Turkish company described the potential bid amount in the media as "groundless".
BTC's creditors, who put the company for sale, have described the other two bids – by Bulgaria's Corporate Commercial Bank and Icelandic businessman Thor Bjorgolfsson - as too low, the insiders said.
Vivacom - formerly known as the Bulgarian Telecommunications Company (BTC) - has gone through a number of controversial privatization deals.
The long-drawn-out and widely criticized EUR 230 M sale deal for 65% stake in Bulgaria's telecom operator BTC was sealed at the end of February 2004 after nearly two years of procedural predicaments, legal and political battles.
Months later Icelandic businessman Thor Bjorgolfsson bought Viva's stake for EUR 300 M and resold it to the investment company AIG Central Europe for EUR 1.08 B.
AIG Investments acquired 65% of the former state-owned telecommunications firm in May 2007. Then in August of the same year it upped its investment to 90%.
Chinese telecoms and media tycoon Richard Li, chairman of Asian telco PCCW, inherited control of Vivacom in March 2010 as part of the acquisition of AIG Investments, a unit of the troubled US insurance group which spans asset management and private equity investments.
The unit was renamed Pinebridge Investments ahead of the takeover by Li's Pacific Century group.
Dubai-based Oger Telecom was the closest to taking over the management of the company following negotiations that dragged on for nearly half a year. The deal however failed because the final offer was not satisfactory, according to insiders.
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