EMPRENO VENTURES LTD SECURED ITS FIRST VICTORY OVER VTB CAPITAL PLC IN THE ENGLISH HIGH COURT. PROCEEDING AGAINST VTB FOR FRAUDALENT AUCTION ON SALE OF THE LARGEST TELECOMMUNICATIONS COMPANY IN BULGARIA VIVACOM TO CONTINUE.
The English High Court today delivered a judgement confirming the right of Empreno Ventures Ltd (“Empreno”) and LIC Telecommunications Sarl (“LICT”) to continue proceedings over VTB Capital Plc, a UK regulated bank and a wholly-owned subsidiary of VTB Bank.
To remind the ground for proceeding is the rigged auction process that led to the unlawful sale of shares in the leading Bulgarian telecommunication operator Vivacom to a consortium, which is led by VTB and includes VTB as a bank and VTB top officials, at a gross undervalue.
VTB and the other alleged co-conspirators were seeking to defeat the claims on a preliminary basis, asserting that the claims were not available to Empreno and LICT under Luxembourg law. The tactics of VTB and other defendants failed.
This judgement of the English High Court became the first victory of Empreno and LICT beneficially owned by Mr. Dmity Kosarev over VTB Capital Plc. Mr. Kosarev commented with respect to the judgement: “We are pleased that the Judge has said to VTB that it must now explain at trial what happened during this rigged auction, why it shut us out the way it did; why they strung us along; and why they allowed it be sold to themselves at a fraction of its true value. We are now looking forward to the disclosure phase of the proceedings whereby VTB and its top officials will be obliged to open all its files, including email correspondence, explaining how they implemented the illegal hostile takeover of Vivacom, оf which I was the major shareholder”.
Empreno and LICT allege in their lawsuit against VTB and other defendants that the auction (based on the enforcement of a €150 mln loan held by VTB Capital Plc) was pre-ordained and that it involved a consortium led by VTB, including individual VTB top officials associated with VTB Bulgaria and VTB Capital Plc. A VTB group company provided the debt finance for the “winning bidder” in the amount of €240 mln, at a significantly higher level of debt than the debt being enforced for repayment by auction.
The Vivacom shares were sold at auction to a VTB-led consortium at a gross undervalue, more than three times cheaper than their fair market value.
Prior to the rigged auction, LICT was a 43.3% shareholder in Vivacom. Empreno ultimately owned 76.6% shareholding through its ownership of LICT and TC-IME, which held a 33.3% interest under a Total Return Swap agreement with Crusher Investment Limited. The VTB Bank’s wholly-owned subsidiary, Crusher Investment Limited, did not return the Vivacom shares to TC-IME, and continued to exercise its voting rights, which ultimately led to the rigged auction taking place.