Empreno Ventures, the principal owner of Vivacom, the leading Bulgarian telecommunications company, filed a complaint to the Financial Conduct Authority voicing concerns of inadequate disclosures of information to the Vivacom debt holders by VTB Capital, a subsidiary of the Russian VTB Bank that might lead to financial decisions made based on non-complete information.
On May 25, 2016, Bulgarian Telecommunications Company EAD (BTC) launched consent solicitation process, which seeks a waiver from debt holders for change of control of the company. Empreno has made numerous attempts to inform the debt holders and all related parties that the solicitation process might be taking place in violation of required disclosure practices and may be deceiving.
Shall the decision take place, it might lead to accelerated debt and possibly bankruptcy of the company. According to Empreno’s letter to the Financial Conduct Authority, the following risks must be fully accounted for:
— on-going legal proceedings concerning VTB Capital as co-defendant in Empreno’s claim in the High Court of Justice in London, England and other proceedings concerning the conduct of VTB Capital
— various conflicting capacities in which VTB Capital act in connection with the transaction involving Vivacom: VTB Capital acts as pledgee (seller) with respect to Vivacom shares, VTB Capital provides financing for the acquisition of Vivacom and participates in the consortium acquiring Vivacom shares. Finally, VTB Capital also acts as solicitation agent in the consent solicitation process
— The issuer will face increased debt level;
— change in spending due to increased allocation of funds towards repayment of outstanding debts to VTBC;
— increased legal risks due to possible violations because the acquisition with the use of the BTC’ funds violates the regulations relating to the financial assistance under the applicable laws (art. 187e, para. 3 of the Bulgarian Commercial Act and the Second Company Law Directive 2012/30/EU);
— high risks of non-compliance with the EU Sanctions and U.S. Sectoral Sanctions due to the fact that VTB Capital together with its affiliates acquires control over Vivacom, VTB Capital parent, VTB Bank, is included in the US Sectoral Sanctions and the EU Sanctions lists.
Vivacom is the largest telecommunications company in Bulgaria and a former state-owned monopoly. It employs over 3,500 people and offers various telecommunication services, including fixed-line, mobile, internet, radio and TV broadcasting, and data transmission services. The company is headquartered in Sofia, Bulgaria. Its principal owner, Empreno Ventures, has filed complaints with the Serious Fraud Office and he High Court of London against VTB Capital for illegally taking control of Vivacom by deliberately prevented the owner from refinancing a 150m euro loan with the investment bank and having sold Vivacom at a knock down price to a connected party.
The copy of the letter and all appropriate supporting documents are published on Empreno’s official website emprenoventures.com.