The English High Court to consider a new claim challenging the VTB transaction concerning Vivacom

On 31 July 2018 V2 Investment Sarl (“V2”) filed a claim with the English High Court against Viva Telecom (Luxembourg) SA (“Viva Luxembourg”), a consortium led by VTB Capital.  In its claim V2 challenges the outcome of the auction resulted in the sale of a Bulgarian telecom company Vivacom at a gross undervalue to the purchaser affiliated with VTB and its managers.

V2 seeks to reverse the sale by VTB Capital of 100% shares in Vivacom holding company called InterV Investment Sarl (“InterV”) and to reinstate the previous shareholding structure over the telecom operator.

This claim is an additional new claim filed in context of the ongoing legal proceedings initiated by Empreno Ventures Ltd (“Empreno”) and LICT Telecommunications Sarl (“LICT”) against VTB Capital, Viva Luxembourg and VTB Capital-designated directors and nominees.

It is worth noting that in February 2018 the English High Court issued the judgement confirming the right of Empreno and LICT to continue their legal proceedings against VTB Capital Plc, an English 100% subsidiary of a Russian VTB Bank.

The legal ground of the claim was the rigged auction resulting in an unlawful sale of shares of a holding company (InterV) of a Bulgarian telecom company Vivacom to a consortium of investors led by VTB, which includes both VTB Bank itself and its managers, at more than three times less than fair market value.

The Court held that Empreno and LICT were precluded from reversing the sale of InterV shares in their individual capacities as Empreno and LICT are only indirect shareholders of V2, which was the pledgor of InterV shares.  However, the Court specifically indicated that V2 itself has the right to challenge the transaction as former owner of InterV shares.  This is exactly what was just done by V2.

Given the new claim of V2 and pending final resolution of the dispute, any attempt to sell Vivacom by its current shareholders pending resolution of V2’s claim, an onward sale of Vivacom by its current shareholders seems highly unlikely.

Empreno strongly urges any prospective investor interested in acquiring Vivacom from its current shareholders to diligently assess risks of purchasing the shares, which remain subject to ongoing legal proceedings.