VTB Capital, a unit of Russia's VTB Bank, and Bulgarian lender Corporate Commercial Bank (CCBank) have agreed to take over debt-ridden Bulgarian telecoms company Vivacom, Vivacom said on Tuesday. Vivacom, whose debts amount to 1.65 billion euros ($2.1 billion), its creditors and two key investors have agreed on a restructuring plan which is to be launched later this month. The deal is expected to be closed in September.
The new owners may seek to sell the troubled telecoms firm to a trade investor in three to five years once they have put it back on its feet, the chairman of CCBank, Tsvetan Vasilev, told business website Livebiz. "It is normal to hope that once the company is stabilised, an investor can expect some capital gain," he told Livebiz.
Debts at Vivacom piled up from a 2007 buyout by AIG, which sold it on to PinePridge Investments, part of Hong Kong telecoms and media tycoon Richard Li's business empire. Vivacom competes in Bulgaria with Telekom Austria's Mobiltel and Globul, a unit of Greece's OTE, which is considering its sale. The latest take-over is subject to certain conditions, including the approval of the regulatory and competition authorities, Vivacom said.
Under the plan VTB Bank and CCBank offered to pay 130 million euros in cash to the senior lenders for a majority of the equity, with 588 million euros of reinstated loans and a minority of the equity to be allocated to senior secured lenders, Vivacom has said. Lenders include Royal Bank of Scotland, Deutsche Bank, UBS, Unicredit Group, HSH Nordbank among others who will have to write off about one billion euros in debt.
They can also choose to exit their loan positions in Vivacom and if all creditors choose to do so the investors will pay them a total of 617 million euros. The acquisition price will depend on the extent of the take-up on the cash exit option and is estimated to be in the range of 0.81 levs to 1,92 levs per share, valuing the company at between 230 million and 550 million levs ($146-349 million).