State to sell BTC golden share for BGN1

12 Mar 2009

The Bulgarian government’s golden share in telecoms company BTC, which entitles it to block decisions at a board level, will be sold for BGN1 (USD0.65) to majority shareholder AIG. ‘The deadline for the state to have control over the telecom activities [of BTC] expires in June this year,’ transport minister Petar Mutafchiev announced.

According to TeleGeography’s GlobalComms database, in 2002 the Bulgarian government put a 65% stake in BTC up for auction. Interested bidders included Austrian-registered investors Viva Ventures, an arm of US-based global private equity group Advent International, and a Turkish consortium led by Turk Telekom and Koc Holding. By the end of October that year Viva’s EUR200 million bid had been accepted ahead of a EUR235 million Turkish offer, but political opposition over the sale conditions and union condemnation of Viva’s proposed job cuts meant that the deal fell through. In January 2003 the Advent/Viva bid was re-approved, only for the deadline to be extended again by further legal problems and political infighting. In February 2004 the stake was officially awarded to Viva Ventures, which eventually agreed to up its offer to EUR230 million. The final date of the sale was pushed back to 20 June 2004 while the government awaited a ruling on whether the award of a mobile licence as part of the deal would break competition rules. The GSM concession was eventually thrown in with the package as agreed.

In January 2006 Viva granted Novator, a company owned by Icelandic entrepreneur Thor Bjorgolfsson, an option to acquire Viva Ventures, to be exercised at any time before June 2008. In early 2007 Novator instructed Lehman Brothers to explore the possibility of selling the 65% stake, and by February five investment funds, Turk Telekom, Turkcell, MTS Sistema and TeliaSonera had expressed an interest. The closing date for bids was set for 23 March at which date the two Turkish companies and the five investment funds — Bain Capital, Mid Europa Partners, Providence Equity Partners, Texas Pacific Group and Warburg Pincus — remained in the running. In May 2007, however, it was insurance group AIG – via its specially created NEF Telecom Bulgaria division – which was announced the surprise winner with an offer of EUR1.08 billion, valuing the whole company at EUR1.66 billion. AIG said it would seek to acquire a further 25% of the company as part of the agreement, and in August 2007 confirmed it had increased its stake to 90%, paving the way for it to make a general offer to the minority shareholders. By the end of November AIG had boosted its holding in BTC to 94%, but plans to delist the company were thwarted after a number of shareholders opted not to sell, claiming that the buyback price of BGN11.30 per share was too low. In October 2008 AIG was reported to have put its stake in BTC up for sale in a bid to raise funds to repay a loan from the US government of USD85 billion.

Bulgaria, Vivacom (BTC)