The publication of the financial statements of Bulgarian Telecommunications Company known as Vivacom raises serious concerns about the quality of such financial statements.
Empreno Ventures Limited takes a view that Vivacom's financial statements do not reflect in a true, accurate and non-misleading way the financial position of Vivacom. The accounts have material omissions:
- shareholder structure of the company is not addressed correctly as the accounts are silent about dispute over 33%-shareholding in the ICC arbitration; Crusher Investment Ltd not being a legitimate owner of 33% equity in the company.
- the legal proceedings launched by Empreno in the High Court of Justice in London, England, whereby Empreno is challenging the sale of 100% shares of InterV Investment S.a.r.l. are intentionally omitted.
- the high risks of Vivacom insolvency if the sale to Viva Telecom (Luxembourg) SA is completed, given that the recent consent solicitation did not result in obtaining an unconditional consent from Vivacom bondholders.
The consent was granted as expressly conditional, subject to lack of any legal proceedings affecting the waiver and amendments to the indenture governing Vivacom €400,000,000 bonds due 2018. Now that these amendments and the waiver are being challenged in the ongoing legal proceedings recently initiated by Empreno, there is no effective consent of the noteholders to a change of control over the company. If the acquisition of Vivacom by Viva Telecom (Luxembourg) SA is completed, the noteholders can request their notes for early redemption. As Vivacom is not ready to quickly refinance the notes, which would normally become due in 2018, the company may go insolvent.