MONEY DRAIN: Despite being the largest provider of fixed-line services and ADSL broadband in the country, BTC has faced stiff competition in the mobile market and has been steadily losing revenue in recent years.
Photo: Nadezhda Chipeva
The recent history of Bulgarian Telecommunications Company (BTC) is a textbook case of leveraged buy-outs gone wrong. Since its privatisation in 2004, the former state fixed-line monopoly has had three more ownership changes, amassing about 1.65 billion euro in debt.
BTC, which operates under the Vivacom brand, is now looking for yet another new owner to turn its fortunes around. Reports in Bulgarian media have claimed in recent weeks that the company has drawn interest from four potential bidders, with Morgan Stanley advising the sale. The suitors Preliminary bids were due in November, but BTC has kept quiet so far on the issue. Reports in Bulgarian media have identified the interested parties as two telecom operators – both from Turkey – and two financial investors.
Turkish rivals Turk Telekom, owned by Oger Telecom, and Turkcell are both said to be assessing BTC, four years after making unsuccessful bids for the company.
Turkcell was exploring expansion opportunities on the Balkans and was interested in BTC, but only if the price was right, Bulgarian weekly Capital quoted the company's head of investor relations, Nihat Narin, as saying. Until now, Turkcell has focused mainly on former Soviet republics, where it owns subsidiaries in Ukraine, Moldova, Belarus, Azerbaijan, Kazakhstan and Georgia.
Oger Telecom, based in Dubai but majority owned by Saudi Telecom (itself owned by Lebanon's Hariri family) has a long history of chasing BTC, failing twice on previous attempts (in 2004 and 2007).
The investment vehicle of former economy minister Nikolai Vassilev, who closed BTC's privatisation as transport minister in 2004, is one of two financial investors to have put in a bid. Vassilev has said that his company, Expat Capital, was in the running on its own, not as a representative for other parties.
Expat Capital's assets under management were worth 50 million euro in October. The company would need at least double that to make a credible bid and the funds were likely to come from Expat shareholder Atanas Tilev (the former owner of the Agricultural Credit Bank, one of the many that went bankrupt in Bulgaria's banking crisis in the mid-1990s), according to Capital weekly.
The identity of the last prospective bidder was enveloped in mystery, with mass-circulation daily Trud identifying it as a London-based vehicle for Tsvetan Vassilev, chairperson and owner of Corporate Commercial Bank.
Vassilev is a controversial figure in Bulgaria because his bank holds the bulk of state companies' deposits, money that has been used to fuel a spree of acquisitions – by companies that are seen as controlled or linked to Vassilev – in several sectors, including the media. According to Trud, Vassilev has partnered with the equally controversial owners of wine and spirits maker Vinprom Peshtera (often accused in the media, but never formally prosecuted, of tax evasion) and former finance minister Milen Velchev, the architect of bond swops in 2002/03 that cost Bulgarian taxpayers about one billion leva.
Velchev declined to comment on the speculation, Capital weekly reported.
Blast from the past The state sold BTC, then considered the crown jewel of state properties, in 2004 to Viva Ventures, a vehicle for US-based fund Advent International, which paid 230 million euro for a 65 per cent stake. Initially, the preferred buyer was Oger Telecom in consortium with Turkey's Koc Holding, only for Viva Ventures to emerge as the winner following a court challenge.
The price was seen as very low from the start, considering that BTC's real estate alone was estimated to be worth in excess of 200 million euro, but criticism grew only louder when the sale of the state's remaining stake fetched 320 million leva on the Bulgarian Stock Exchange.
Just a year later, Icelandic billionaire Thor Bjorgolfsson, a prolific equity investor in Bulgaria in the middle of the decade, effectively gained control of BTC by agreeing to buy-out Advent's stake for 620 million euro.
In 2007, he sold his stake, which he took to 90 per cent by buying traded stock, to US insurer AIG's asset management arm (picking it ahead of Oger Telecom once more), for a total 2.1 billion leva.
Each ownership change was heavily-leveraged, with AIG's investment unit piling most of the acquisition cost onto BTC – 1.3 billion euro in senior and subordinated debt, as well as a further 325 million euro owed to mezzanine lenders.
After AIG's bankruptcy in 2008, its asset management subsidiary was sold to Hong Kong billionaire Richard Li and renamed PineBridge, but the breach of bond covenants in 2010 has kick-started a long process of restructuring talks, which culminated in Morgan Stanley's hiring to advise on the sale of BTC.
Muddied mess It remains to be seen how big of a loss BTC's creditors will have to take on their loans; mezzanine lenders, which include hedge fund Tennenbaum Capital Partners and Royal Bank of Scotland, could lose all their money.
In October 2010, Oger Telecom offered to pay 125 million euro for a minority stake in BTC, in exchange for control of operations with minimum interference from creditors. Under the terms of that proposal, its stake would increase over time, as BTC's debts were being paid off.
A similar deal was being prepared this time around as well, Capital said, with PineBridge unlikely to receive anything for its stake. According to the weekly, a preferred buyer could be picked by spring, allowing for the deal to be closed by mid-2012.
By that point, the chosen buyer will likely know the outcome of three separate lawsuits brought by the Bulgarian state (which is claiming a total 100 million euro in damages), and could adjust its plans accordingly, the newspaper said.
The narrow focus of many euro zone countries on fiscal austerity is deepening the jobs crisis and could even lead to another recession in Europe, said the Director of the ILO Institute for International Labour Studies and lead author of the report, Raymond Torres.
Yassen Lyubenov is the new head of marketing at Bulgarian beer brewer Kamenitza. Lyubenov has 12 years of experience in marketing in the fast-moving consumer goods sector and has started his career as assistant brand manager at Kraft Foods Bulgaria. He later became brand manager at Wrigley Bulgaria, with responsibilities for Bulgaria and Macedonia. Prior to joining Kamenitza, he was senior marketing manager at Wrigley Russia, where he was in charge of brand expansion into Ukraine, Belarus, Central Asia and the Caucasus.
Lyubenov has a bachelor's degree in international business administration from the University of Lincoln, UK.
Kamelia Lozanova has been appointed the executive director of the Employment Agency, a position she has held ad interim since September 2011, following the resignation of her predecessor Rossitsa Stelianova. Prior to that, Lozanova was the agency's deputy executive director in charge of international projects and European programmes. She has been with the agency for more than 20 years.
Lozanova has a degree in Slavonic philology from the St Kliment Ohridski University of Sofia.
Gloria Dimitrova has been appointed executive director and member of the managing board at Uniqa Life Insurance Bulgaria. Dimitrova began her career in 1998 at the insurance supervision directorate, but moved to the private sector and worked for professional services and insurance brokerage firm Marsh&McLennan and US insurer AIG, both in Bulgaria and the Middle East. She joined Uniqa as regional director for Sofia in 2010.
Dimitrova has a degree in economics from the University for National and World Economy in Sofia and a master's degree in insurance from the Business Academy in Svishtov.
Bedros Kalfayan, general manager of skin care and cosmetics company Beiersdorf Bulgaria, will oversee the parent's company units in Romania and Moldova starting April 1. Following company restructuring, Beiersdorf's subsidiaries in the three countries were merged and are now one unit, part of Beiersdorf Central and Eastern Europe. Kalfayan joined Beiersdorf in 2007 as sales manager and was promoted to general manager in 2008. Prior to that, he worked for Axxon Bulgaria, Ferrero and Rubella.
Kalfayan has a master's degree in industrial management from the Technical University in Sofia.
Sasha Bezuhanova has been appointed Hewlett-Packard public sector director for emerging markets, where she will oversee HP public sector activities in 63 countries, including Bulgaria. Bezuhanova will also be in charge of HP's relations with the European Union. Bezuhanova has been HP's public sector director for Central and Eastern Europe since 2008; before that she was general manager of HP Bulgaria since 1998.
Bezuhanova has a master's degree in electronics from the Technical University in Sofia and has completed a managment programme at INSEAD.
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