Vivacom ownership changes close to being finalised

14 Oct 2010

Bulgarian daily newspaper Dnevnik reports that long-running discussions over a change of ownership at Vivacom (formerly Bulgarian Telecoms Company, BTC) are close to a resolution, having dragged on for the last six months. According to the paper Vivacom’s major lenders have signed a lock-up agreement on the restructuring options for the debt-laden company with mezzanine creditors (ie the intermediate creditors) and its strategic partner Dubai-based Oger Telecom. The report adds that once the agreement is finalised, the capital structure of the telecoms group will be changed.

Hong Kong telecoms and media tycoon Richard Li is the biggest shareholder in Vivacom through his private equity firm PineBridge Investments. Last month it was revealed that Li was exploring restructuring options for Vivacom, after lenders backed an alternative plan from Oger and mezzanine creditors. Oger and the other investors, which together hold EUR325 million (USD412.3 million) of Vivacom’s EUR1.6 billion debt pile, derailed a restructuring proposal by PineBridge to inject about EUR180 million of fresh capital in the business alongside Li’s Hong Kong telecoms firm PCCW. Vivacom, which was saddled with a EUR1.645 billion loan when former owner AIG took control of it in August 2007, agreed a covenant waiver with lenders until the end of October, one of the sources said.

PCCW abandoned its investment plans for Vivacom at the end of August, when senior lenders opted to support an alternative proposal by Oger and the intermediate creditors. This also involves a capital injection and an equity conversion of at least part of mezzanine lenders’ holdings. While PCCW is thought unlikely to return to the table with an offer of fresh capital, PineBridge has not ruled out trying to strike a deal that could still include Oger, and yet preserve its investment, the first source said.

Bulgaria, Vivacom (BTC)