Vivacom sale derailed by lawsuits, report claims

17 May 2012

The Bulgarian government has lost the first of three lawsuits it filed against Viva Ventures, a unit of the London-based equity fund Advent International, which acquired a 65% stake in former monopoly operator Bulgarian Telecommunications Company (BTC) in 2004. In the first lawsuit, reports, the International Arbitration Court in Paris has ruled that Viva Ventures abided by its commitments to the telco’s workforce, as stipulated in the sale contract. Two other lawsuits are still pending. The first claims that Viva Ventures failed to pay the government any part of an agreed BGN18 million (USD11.4 million) fee relating to the maintenance of military communications equipment. The second is for alleged breaches of the so-called ‘clawback’ agreement, under which Viva Ventures was obliged to pay EUR78 million to the state following the resale of BTC.

Viva Ventures acquired 65% of BTC in 2004, paying EUR230 million for the stake and a further EUR50 million for a mobile telephony licence. Following the sale, BTC was renamed Vivacom. Viva Ventures sold its stake just a few months later to Icelandic businessman Thor Bjorgolfsson for EUR300 million. Bjorgolfsson then offloaded the BTC shares to AIG Investment for EUR1.08 billion. Having upped its interest to above 90%, AIG Investment was subsequently renamed Pinebridge Investments and acquired by Hong Kong-based Pacific Century group. The Pinebridge stake was recently put up for sale by creditors, with Turkcell thought to be the highest bidder, but the deal collapsed after the Turkish operator called for financial guarantees relating to the ongoing legal action against Viva Ventures.

Bulgaria, Vivacom (BTC)