Vivacom put up for sale despite ownership dispute

12 Jul 2019

Bulgarian telecoms company Vivacom has been put up for sale, with Spas Roussev, the Bulgarian businessman that heads the consortium behind Vivacom, confirming the development. The Financial Times writes that Lazard has been appointed to sell the business, valued at around EUR1.2 billion (USD1.35 billion). According to three sources with direct knowledge of the matter, meetings have already been held with potential strategic and private equity buyers. However, Lazard has been warned that potential buyers need to be aware of an ongoing civil action related to the 2015 sale of Vivacom and a dispute over its ownership.

Vivacom is currently owned by holding company Viva Telecom Bulgaria, itself a subsidiary of Luxembourg-based InterV Investment, which in turn is wholly owned by Viva Telecom (Luxembourg), whose main shareholder (46%) is listed as Spas Roussev (via Viva Edge Telecom). Other minority investors are listed as follows: VTB Bank, Delta Capital Investments (controlled by Milen Velchev, Georgi Velchev and Krasimir Katev), Michael Tennenbaum and companies managed by Mezzanine Management Central Europe II.

The telco was sold to its current owners in late 2015, following an auction triggered by a default on a loan repayment to VTB Capital by a Luxembourg holding company. Three bids were received, from: Greece’s Olympia Group (backed by US-based hedge fund Third Point); Marc Schneider (co-founder of European cable group UPC, backed by US-based private fund CVC); and Spas Roussev (linked to VTB Capital). Shortly after, Spas Roussev was announced as Vivacom’s new owner after placing a bid of EUR330 million (valuing the telco at EUR700 million). Schneider’s bid was disqualified for ‘non-conformity with the procedure’, despite valuing Vivacom at EUR850 million. The sale was approved by the Commission on Protection of Competition (CPC) in January 2016.

In March 2016, however, Empreno Ventures – an investment company controlled by Russian businessman Dmitry Kosarev, which claimed to have bought a stake in the Luxembourg holding company LIC Communications (previously known as SHCO 79) that owned Vivacom prior to the 2015 auction – filed a lawsuit against VTB Capital, Mr Roussev and Mr Velchev in the High Court of London over the alleged ‘illegal seizure of 100% equity stake in Vivacom’. Mr Kosarev has argued that the auction was a ‘sham’ and Vivacom had been sold to the consortium at an artificially low price, thus wiping out his investment. Mr Roussev has denied such claims though, saying the auction was ‘legitimate and transparent’, while also suggesting that a High Court ruling in London this week that rejected Empreno’s attempt to challenge the auction on technical grounds was a ‘substantial win’ that has paved the way for the sale of Vivacom. For his part, Mr Kosarev has said that he will continue to pursue his claim in the UK courts.

Bulgaria, Vivacom (BTC)