Originally Posted by Financial Times, September 29, 2019
Two private equity bidders are vying to buy Bulgaria’s largest telecoms company despite a vicious ownership dispute.
Vivacom went up for sale in July after Lazard was appointed to find a buyer for the former Bulgarian telecoms monopoly.
United Group, owned by BC Partners and KKR, and Providence Equity Partners have launched indicative bids for the company and are conducting due diligence, according to two people with direct knowledge of the situation.
Vivacom is being sold by Spas Roussev, a London-based Bulgarian businessman, and the London arm of Russian bank VTB, which together took control of the company in a 2015 auction after a debt default.
Vivacom was expected to be valued at about €1.2bn based on recent deals in the region for telecom assets, according to people involved in the sale. United Group has bid €1.1bn, according to the two people, while Providence has offered €1.05bn. A sale price in this region would mean a big profit for Mr Roussev and his partners, who paid €330m for Vivacom less than four years ago.
However, the sale has been overshadowed by an ownership dispute. Lazard and a list of interested parties have received letters from the lawyers of Empreno Ventures, an investment company owned by Russian businessman Dmitry Kosarev, warning them of litigation related to the 2015 auction. Mr Kosarev had a stake in the holding company that owned Vivacom but his investment was wiped out by the debt default.
Empreno argues that the auction of the business was a “sham” and that the business was sold at an artificially low price. Mr Roussev and VTB deny that claim but Mr Kosarev has continued to challenge the outcome of the auction in the UK and Luxembourg courts.
The letters, seen by the Financial Times, highlight the unresolved status of the dispute over Vivacom. Empreno said it would “increase legal pressure on Vivacom and its shareholders to defend its interests”.
The offers are the latest sign of private equity activity in central and eastern Europe’s telecoms sector, after Czech fund PPF last year acquired Telenor’s telecoms businesses in the Balkans for €2.8bn. KKR has put its German fibre business Deutsche Glasfiber up for sale with a €3bn-€4bn price tag, according to a person with direct knowledge of the process.
BC-backed United Group, Serbia’s largest cable company, is keen to consolidate the Balkan telecoms market and this year completed a takeover of Tele2 in Croatia for €220m. It also owns assets in Slovenia, Bosnia and Montenegro.
A sale would represent the sixth time Vivacom has changed hands since it was privatised in 2004.
United Group and Providence declined to comment on their interest in the company.