Empreno Ventures Ltd. (“Empreno”) and its subsidiary LIC Telecommunications Sarl (“LICT”) report that on 29 July 2019 a new claim was brought in the Commercial Court of Luxembourg on behalf of pledgor V2 Investment Sarl against VTB Capital Plc, Viva Telecom (Luxembourg) SA and others, which claims as relief the cancellation and reversal of the sale and transfer of Vivacom, the leading telecom operator in Bulgaria.
Vivacom was sold as a result of the fraudulent and unlawful auction in November 2015 at a gross undervalue. The purchaser is an affiliate with VTB Capital and its top-management, the “consortium of investors” called Viva Telecom (Luxembourg) SA whose major shareholder Spas Roussev, a Bulgarian businessman, was a front-man of VTB according to the evidence made available for the court.
This new claim filed with the Commercial Court of Luxembourg arises out of, and is a direct result of, a recent judgement of the English High Court of Justice of 5 July 2019. By its judgement the High Court dismissed the proceedings issued in July 2018 by the LICT/Empreno-nominated directors of V2 Investment Sarl for the same relief due to lack of corporate approval. The board of V2, in addition to two Empreno/LICT-nominated directors, includes two representatives of VTB who are also defendants in the said proceedings and oppose to such proceedings being properly authorised. Notably the claim regarding the fraudulent nature of the auction has not yet been considered on the merits. At the same time, effectively a step-by-step instruction follows from the judgment of 5 July 2019 on how such a claim can be approved in the face of the clear conflict of interest on the part of VTB-nominated directors. In particular, the court confirmed the correct Empreno’s reading of Vivacom shareholders’ agreement regarding the possibility of filing a claim by LICT/Empreno-nominated directors on behalf of V2 Investment Sarl. The filing of the new action with the Commercial Court of Luxembourg addressed all aspects of the judgement of the High Court and was approved at the new board meeting of V2 Investment Sarl held on 10 July 2019. VTB-nominated directors did not participated in the voting and when calculating the quorum due to a conflict of interest.
Empreno and LICT also report that on 29 July 2019, they issued new proceedings in the United States against Mr. Michael Tennenbaum and Tennenbaum Capital Partners. These proceedings were initiated in support of the Empreno and LICT claim filed in February 2016 to the High Court of Justice in London, with the aim of obtaining additional evidence from US minority shareholders participating in the auction for the sale of Vivacom.
To remind, by its judgement of 7 February 2017 the English High Court rulled that the 2016 claim of Empreno and LICT seeking damages in connection with the lost opportunity to acquire Vivacom due to the fraudulent nature of the auction should go to full trial and be considered on the merits. The case management conference for this claim is scheduled for 18-19 March 2020.
During the court hearings in May 2019, new evidence was presented to the English High Court - the witness statement of Ms. Jocelyn Bennett, the former managing trustee of the Spas Roussev family trust. The witness statement was not admitted for the purposes of this hearing but will be deployed at subsequent hearings. In her witness statement, Ms Bennett confirmed the claim of Empreno and LICT on all material points: the fraudulent nature of the auction, a significantly underestimated price, the intention of the consortium participants to onsell the telecom operator at a fair market price, lack of funds of Spas Roussev and the fact that VTB always stood behind him, etc. It follows from the email correspondence provided with Ms. Bennett’s witness statement that negotiations were held in the USA between Spas Roussev, on the one hand, and Michael Tennenbaum and representatives of Tennenbaum Capital Partners, on the other hand, shortly before the auction.