Банкеръ Weekly

Briefs

LAWSUITS TO THE MAX FOR BTC DEAL?

The saga regarding the sale of the Bulgarian Telecommunications Company (BTC) entangled after on Tuesday (July 29) a 5-member team of the Supreme Administration Court (SAC) confirmed the ruling of a 3-member SAC team, rescinding the decision of PA's Supervisory Board, by which the Vienna-registered Viva Ventures was rejected as a majority buyer of the Bulgarian telecom. Thus, besides two different contracts with two different buyers for BTC's sale, the telecom now got the ruling of five supreme magistrates, which is final (i.e. it cannot be appealed). Both candidate buyers' response was polite. We expect PA's Supervisory Board to take into consideration SAC's ruling and act accordingly for the soon finalization of the deal. We expect to start working for making BTC a first-class European company, Joanna James, Managing Director of Advent International for Central and Eastern Europe, said in an official statement. She reiterated that Viva Ventures' offer was the best one for the Bulgarian telecom's future, specifying that Advent's subsidiary has already ensured not only the deal's financing, but a managerial team as well. The competitors from Koc Holding - Turk Telecom hurried to declare their offer not only better but more lawful. PA's Supervisory Board will consider in detail the entire divestment procedure, establish any violation of the law and the tender's rules that have been made so far, and will estimate to what extent each of the candidates has acted in conformity with them, the Turkish consortium said. Such a review would enable the Supervisory Board to nominate Koc Holding - Turk Telecom exclusive buyer of BTC, opening the way for signing the documents for the sale that have already been endorsed. At first glance now everything depends on the seven representatives of politial forces in PA's Supervisory Board (three from NMSII, two from MRF, one from BSP and UDF each). PA's Supervisory Board may approve the divestment deal for the sale of 65% of BTC's capital with the candidate who was ranked first in the tender, by an explicit administrative act or expressing a silent agreement in compliance with article 16, item 2 of the Act on Privatisation and Post-privatisation Control, the final decision of the supreme magistrates reads. PA's Supervisory Board itself refused any comments whatsoever. Unofficially, however, it was said there could be two and a hald possible decisions. The Supervisory Board can approve by a special act the contract signed with Viva Ventures or reject it (of course with different arguments from those already refuted by SAC's two teams). The Supervisoty Board may not come out with a special decision and then the so-called silent agreement would be in force. In both cases Viva Ventures will become BTC's majority owner, at least on paper. Such a development would surely be appealed and the court saga will begin again. The appeal this time will be filed by Koc Holding - Turk Telecom, with which some 15 days ago the PA endorsed a contract for the sale of 65% of BTC's shares.Besides the different parameters of the two offers, the volume of the bilaterally endorsed papers is different. The officials who undertook the responsibility for the deal on Bulgaria's side are also different. While the package of documents with Viva Ventures includes only the draft contract for BTC's sale and has been signed only by PA's head Iliya Vassilev, the one with the Turkish consortium contains all the major contracts and agreements and each piece of paper in them has been bilaterally signed. After late in the evening on July 18 representatives of PA and Koc Holding - Turk Telecom concluded with the documents for the sale, at 04.00 hrs on the following day the just-appointed Transport Minister Nikolay Vassilev signed the agreed new statutes of BTC, the agreement between the shareholders, and the contract for the company's management. We'll also recall that the former transport minister and principal of the telecom Plamen Petrov flatly refused to do that, when Viva Ventures was the preferred candidate buyer. Therefore, mass media then placed the ex-transport minister among the first persons, lobbying for the Turkish consortium. The fact that the Turkish candidates enjoyed the support of some of the governors became evident on May 7 when the seven members of PA's Supervisory Board unanimously rejected BTC's sale to Viva Ventures and included in the deal the consortium between Koc Holding and Turk Telecom which was ranked second in the tender. On the day when SAC's 5-member team extended its ruling the Premier Simeon Saxe-Coburg-Gotha was in Spain. Therefore, his subordinates refrained from making comments or were quite cautious in their statements. Now, PA Supervisory Board's final sanction should be waited for in order to see how the divestment procedure would continue, said Valeri Dimitrov, Chairman of the parliamentary Economic Committee. According to him, the Supervisory Board might make a new decision on the deal with motives different form the previous ones. But if they cancel the procedure, both rejected canidates could appeal against their decision in front of SAC. The same stance was taken by Konstantin Penchev, Deputy Chairman of NMSII's paliamentary group.MRF's group was most stirred up. Ahmed Dogan's people even sought from journalists in the Parliament's lobbies copies of the court's statement. Yunal Tassim was most categorical, pointing out that the court manifestly becomes a side in BTC's deal, which was not proper. As expected, the deputies from BSP and UDF demanded cancellation of the privatisation procedure. The left opposition urged the other parliemantary represented parties to hold political consultations for BTC's future. A day later only representatives of the splinter group National Ideal for Unity (NIE) responded to the invitation. NMSII refused to take part in the consultations and postponed the internal discussions for later on (obviously expecting the PM's return to Bulgaria). UDF took a flat stand against the deal. The MP Blagoi Dimitrov pointed out that its parameters would injure Bulgaria's interests and it should not be closed, independent of the court's ruling. In his words, the privatisation procedure should be stopped and a new one invited when better terms should be sought even from the same candidate buyers. Such a recommendation - a new strategy for BTC's sale - hides quite a lot of dangers, Valeri Dimitrov explained. A parliamentary decision for cancelling the present divestment procedure would be entirely unlawful and would be appealed in front of the Constitrutional Court, the professor in law pointed out. He recalled the former stance of the constitutional magistrates, under which Parliament cannot usurp rights of the executive power and pronounce on privatisation deals. Independent jurists do not rule out the possibility of an eventual new procedure to place the Bulgarian State in the dock. The unsuccessful caniddate buyers could sue Bulgaria, demanding compensation for incurred financial injuries. Pundits say that Viva Ventures' expenses for the deal have already approximated a 7-digit number (in USD).

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